The Basic Economic Questions

Each country has a different set of wants, needs, and resources.  Naturally, they have very different ways of organizing their economies. But who should make these economic decisions: consumers, business leaders, political leaders, or a combination of each?  Maybe the economy should just continue to operate as it has done in the past - generation after generation.

There are three basic economic questions that every society has to answer:
 

"Who decides what will be produced?"

"Who decides how much will be produced?"

"Who decides who will consume it?"

Throughout history, different societies have attempted to answer these questions in a number of very different ways.  There are four economic systems: Free Market Economy, Command Economy, Traditional Economy, and Mixed Economy. 
The chart below outlines how each of these economic systems has chosen to answer these basic economic questions.
 

Answer the following qestions in your notebook:

 

1.      What are the three economic questions?

2.      How does a Centrally Planned economy answer the question “What will be produced”?

3.      How does a Market Economy answer the question “For whom will it be produced”?

4.      In which system does the government exercise the most control?

 

5. Whoch system do you think would be the most efficient?  Explain.