1. Unit 7: Foundations of Economics:
Three Economic Questions

2. Three Economic Questions:
Main Idea: Introduction to the Three Economic Questions
Notes:
Regardless of which economic system a country chooses, each must answer the same 3 questions:
What should be produced?
How should it be produced?
For whom should it be produced?

3. Three Economic Questions:
Main Idea: What should be Produced?
Notes:
Because of scarcity, no country/nation is able to produce all of its wants and needs.
Often they decide what to produce based on the natural resources available to them.
EX: Columbia produces coffee because its soil and climate are best suited for growing coffee beans.

4. Three Economic Questions:
Main Idea: How Should it be Produced?
Notes:
Once a nation decides what should be produced, it then must decide how best to go about producing the good/service.
There are trade-offs possible in the factors of production (land, labor, capital, entrepreneurship)—so decisions must be made as to what the best combination is for that nation to produce their good/service at the lowest cost possible.

5. Three Economic Questions:
Main Idea: For Whom Should it be Produced?
Notes:
The type of economic system under which people live determines how the goods and services will be distributed among its members.

6. Three Economic Questions:
Main Idea: Productivity, Specialization, and Technology
Notes:
Most nations find it most productive (efficient) and profitable to engage in a concept known as specialization.
Specialization is the idea that a nation should produce and export a limited assortment of goods for which it is particularly suited in order to use its resources most efficiently.
EX: Japan has specialized in electronics, which has led to many nation’s importing these types of products from Japan.

7. Three Economic Questions:
Main Idea: Productivity, Specialization, and Technology (cont’d.)
Notes:
Over time, nation’s develop specific technologies to enable them to boost productivity by allowing for more goods/services to be made at lower costs and in a shorter amount of time.