1. Broad Social Goals of an Economic System

2. Principle #1: People Face Tradeoffs
Goals of a society
Economic Efficiency
Refers to how well scarce productive resources are allocated to produce the goods and services people want and how well inputs are used in the production process to keep production costs as low as possible.
Allocative VS Productive
Economic Equity
Means what is “fair.” Economic actions and policies have to be evaluated in terms of what people think is right or wrong. This usually deals with questions of income and wealth. Equal outcomes VS equal opportunities.
Economic Freedom
Refers to things such as the freedom for consumers to decide how to spend and save their incomes, the freedom of workers to change jobs and join unions, and the freedom of individuals to establish new businesses and close old ones.
Economic Growth
Refers to increasing the production of goods and services over time.
Economic Security
Refers to protecting consumers, producers, and resource owners from risks that exist in society. Each society must decide from which uncertainties individuals can and should be protected and whether individuals, employers, or the government should pay for this protection. 9

3. Principle #1: People Face Tradeoffs
Equity VS. Efficiency
Most common tradeoff for societies
The Three Economic Questions
What to produce?
Goods VS Services
Capital Goods VS Consumer Goods
Durable Goods VS Non-durable Goods
How to produce?
For whom to produce?

4. Economic Efficiency
How well are scarce productive resources (the factors of production) are allocated to produce goods and services.
For example: Should we develop alternate fuels?

5. Economic Equality
Policies have to be evaluated in terms of what people think are right or wrong.
For example: Should the rich get a tax cut? Is it “fair” to increase the sales tax?

6. Different Views of Economic Equality
In the United States and similar economic systems we look for equality in opportunity, does everyone have the same chance of success.
In other systems such as Cuba they look for equality of outcome, does everyone have access to health care, education, housing etc.

7. Safety net
Programs intended to help individuals and families experiencing unfortunate economic circumstances.
Food Stamps
Unemployment
WIC
SSI
Disability insurance
FEMA

8. How do we compare?