Consumer goods- Consumer goods are products used by consumers to satisfy wants and needs
Capital goods- capital goods are used to produce other products
Services- intangible, satisfy wants.
2. How to produce? Depends on:Availability of resources, cost of resources,opportunity cost,goods and services people want, productivity and efficiency.
land- natural resources used in production(renewable and non-renewable)
labor- human physical and mental effort that is used to produce goods and services.(manual/mechanized)
capital-produced means of production(human capital( work experience, education, on the job training), real capital(capital goods-machines, tractors) and intellectual capital( patents/copyrights))
enterprise- ability to take factors of production to make product people want
depends on the opportunity cost of labor and capital, and the productivity of land and labor
3. For whom?
cooperation- everyone decides what work needs to be done, how the work is done and who gets what share of the products.
custom- tradition dictates what work you do and what share of products you get.
command- the person in power decides what work you do and what share of the products you get
competition- supply and demand determines who does what and who gets what. (laissez-faire)
Dr. Stephanie Powers, "Macro Economics", (lecture, Donald School of Business, Red Deer AB, Winter 2012)
The three fundamental questions of economics are:
1.What to produce?
- Consumer goods- Consumer goods are products used by consumers to satisfy wants and needs
- Capital goods- capital goods are used to produce other products
- Services- intangible, satisfy wants.
2. How to produce?Depends on:Availability of resources, cost of resources,opportunity cost,goods and services people want, productivity and efficiency.
- land- natural resources used in production(renewable and non-renewable)
- labor- human physical and mental effort that is used to produce goods and services.(manual/mechanized)
- capital-produced means of production(human capital( work experience, education, on the job training), real capital(capital goods-machines, tractors) and intellectual capital( patents/copyrights))
- enterprise- ability to take factors of production to make product people want
- depends on the opportunity cost of labor and capital, and the productivity of land and labor
3. For whom?Dr. Stephanie Powers, "Macro Economics", (lecture, Donald School of Business, Red Deer AB, Winter 2012)