Quiz 1- Chapter 1 What is the problem of scarcity ? We do not have enough resources (land, labor, capital, and entrepreneurship) to produce all of the goods and services we need and want so we have to make choices about: what to produce how many of each item to produce how to produce each item and who gets the items produced What does a society do with its limited resources? Produce goods and services Why does a society produce these goods and services? To satisfy wants and needs Comparative Advantage: since each person/country is not equally good at doing everything, specialize in what you do best and trade with others Comparative Advantage leads to: interdependence What does America do best? Services The type of economic and political system in which people live affects the way they behave Capitalism Socialism Communism Amount of economic freedom A great deal Not as much Very little Economic incentives Rewarded for good, punished for bad In private: same as capitalism In public: yes but different
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