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