Basic Economic Decisions How the economy works to satisfy your basic needs… or not.

What are the three (3) questions which describe the most basic decisions which are made in an economy? Which goods and services should be produced, and in what amounts? How should these goods and services be produced? Who will get goods and services that are produced?

Who decides what will be produced in a capitalist economy like our own? What will determine the quantity, or amount, of a product which is produced in an economy? The people who own or can get resources decide what to produce from the scarce resources that they have. As an owner or resources decides what to produce, he or she also decides the quantity, or amount of a product to produce. This choice will be determined by the amount of resources the person has to produce goods and the demand for those goods in the marketplace.

The Least Costly Land, Labor, and Capital… In making decisions about how to produce, people usually want to choose the combination of resources that will be the least costly. Lowering the costs of production allow business owners to collect more profits!

Technology Technology in the world of economics is the practical application of science to commerce or industry. This may involve using machines or robots to mass produce items, or it may have to do with the way products are bought and sold…

Over the long run… Technology is useful in lowering the costs of production. Although the start-up costs with technology are often high – for example, installing a new computer system or a smartboard – they will pay for themselves over time with increased productivity. Did the invention of a John Deere tractor with a hay baler save this farmer time and effort? You may rest assured that it did…

Technology influencing global markets and increasing productivity: Faster and more efficient transportation systems like trains, planes, interstate highways systems, trucking, and superior ports are all factors that encouraged greater productivity. Electronics have allowed robots and mechanisms in factories to produce goods faster and for less money than people. Computers and the internet allow businesses to advertise and sell products and services to larger and larger markets.

Types of Economies Communism, or command economics, value equality for all people in society, and therefore attempt (in a very, very flawed and corrupt and failing way) to distribute products equally among all of its citizens. Free Market Capitalism, the style of government we have in the United States, values freedom over equity. This system might let citizens compete freely among themselves to try to get the goods and services they want, even if it means that some people get more than they need while others get less than what they need.