ECON 200 - Chapter 3: Notes Scarcity, Trade-Offs and...

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Chapter 3: Notes Scarcity, Trade-Offs and Economic Growth Three Economic Questions Every Society Faces Because of scarcity, certain economic questions must be answered regardless of the level of affluence of the society or its political structure. In Market-Oriented Economies , people vote on economic affairs with their dollars Consumer sovereignty describes how individual consumer in market economies determine what is to be produced. Command Economies rely on central planning, where decisions about what is produced is largely determined by a government official or a committee associated with the central planning organization. Market Economies , on the other hand, largely rely on a decentralized decision-making process, in which literally millions of individual’s produces and consumers of goods and services determine what goods will be produced. Most countries, including the US, have mixed economies, some public and some private sectors All economies regardless of political structure must decide how from several possible ways to produce the goods and services that they want Decision must be made as to which method is appropriate The best or optimal for of production will vary from one economy to the next Labor Intensive methods will be used where capital is relatively scarce
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ECON 200 - Chapter 3: Notes Scarcity, Trade-Offs and...

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