THE THREE ECONOMIC QUESTIONS These questions determine what kind of economic system a country will have.

1a. What to Produce? An economy can produce goods & services **Goods: are objects, such as food, clothing, and furniture, that can be bought. ** Services – work performed by one person for another.

1b. How much to produce? How much of our resources are we willing to use? How much of the product will the consumers be willing to buy? Example: Production of pencils increases towards the beginning of the school year

2. How to produce (methods) This includes the use of capital goods & labor: Capital: Example – assembly line machines, ax, chainsaw, technology Labor: Example – lumberjack, miner, machine operator, etc.

3. For whom? Who receives the output (goods and services)? How are we going to share/distribute what we produce?

How each nation answers these questions determines what economic system they have.