 All goods and services require stuff to make them. (They don’t make themselves)  Land= natural capital (trees, water, dirt, silver)  Labor= Human capital (education, labor, dedication, creativity)  Capital= Physical Capital (money, buildings, tools, machines)

 Because everything is scarce (even oxygen) resources must be managed wisely.  Three basic economic questions: 1. What should be produced? 2. How much should be produced? 3. How should get it?

1. Freedom- ability to make our own choices 2. Efficiency- using the scarce resources we have with minimal waste 3. Equity- fair and just distribution of resources 4. Growth-producing more goods and services 5. Security- taking care of those who cannot care for themselves 6. Stability- knowing that goods and services will be available when needed.

 You can’t achieve all 6 goals so countries have to choose  Growth & Freedom most important to market economies  Security and Stability are most important to traditional economies  Efficiency and Equity are most important to command economies

 Different governments answer the 3 economic questions in different ways.  Traditional-produce and consume most everything within the community. Roles assigned based on tradition.  Command- government central planners decide what is to be made and for whom  Market- supply and demand decides who gets what  Mixed- some combination of the 3 above systems.