3 Basic Economic Questions

Countries and nations as well as households and firms must answer three questions when they face economic choices to make.

     1. What to produce?

  • Allocation- society must make choices based on their needs
  • American car companies choose to produce smaller more fuel efficent cars to compete with foreign manufacturers.

     2. How should we produce it?

  • Efficiency- society must choose what to produce based on their resources
  • American car companies decide to stop outsourcing jobs to other countries and use the plants here in Michigan

     3. For whom should we produce?

  • Distribution- society must choose what to produce based on the population and other avaliable markets
  • American car companies drop the sale prices, allowing everyone to afford their cars

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s