Fundamental Questions of Economics

When a business or a society determine the products and services they intend to sell, they have decided

• What to produce

• How to produce

• For whom to produce

When a business or society makes decisions about the ingredients, labor force, or processes used to produce a good or service they intend to sell, they have answered

• what to produce

• how to produce

• for whom to produce

When a business or society determines the groups of people they will distribute or market their product to, they have determined

• what to produce

• how to produce

• for whom to produce

What kind of economy allows private sector citizens to make most of the decisions about what, how, and for whom to produce goods and services?

• traditional

• market / capitalist

• command / communist

• mixed

In what kind of economy does the government make most of the decisions about what, how, and for whom to produce goods and services?

• traditional

• market / capitalist

• command / communist

• mixed

In what kind of economy are decisions made based on old customs and beliefs about what, how, and for whom goods and services should be produced.

• traditional

• market / capitalism

• command / communism

• mixed

An entrepreneur decides to set up a factory that will make pencils. He has decided

• what to produce

• how to produce

• for whom to produce

The entrepreneur decides she will market her product to schools, teachers, and students. She has determined

• what to produce

• how to produce

• for whom to produce

The entrepreneur orders cedar wood, yellow paint, and white eraser tips in order to make her product. She has determined

• what to produce

• how to produce

• for whom to produce

The entrepreneur hires 10 factory workers, a supervisor, and one maintenance person to help make her pencils. She has determined

• What to produce

• How to produce

• For whom to produce