1. Three Basic Economic Questions
Class Notes

2. Choices People in any economy face major economic decisions due to:
Unlimited wants
Limited resources
THIS SITUTATION IS CALLED SCARCITY

3. 1. What goods and services should be produced?
In what amount?
Why?
Producers make choices about how to use their resources
Based on many factors:
Amount of resources
Cost of resources
Amount of product they think will sell

4. 2. How to produce these goods & services?
Usually want to choose combination of resources that will be least expensive
Technology: usually causes a decrease in the costs of production

5. 3. Who gets the goods and services that are produced?
Wants are greater than the resources available to satisfy them
Potential solutions:
Divide equally
Small group decides
Produce more to have more goods

6. Answers
Answers to these questions reflect the goals and values of the society

7. Answers Value Economic Answer Equality Share resources equally Freedom
Let citizens compete freely for resources and goods