Fundamental Principles
The fundamental economic problem where human wants are unlimited, but resources are limited
Scarcity
The three fundamental questions every economic system must answer
What to produce, How to produce, and For whom to produce
An economic system driven by private property ownership, competition, and the profit motive
Capitalism / Market Economy
Name two modern countries that operate primarily under a mixed or capitalist-leaning model
United States, Singapore, UK, France, or Canada
Who owns land and resources in a pure Command economy?
State / Government
The value of the next-best alternative given up when making a choice
Opportunity Cost
Deciding whether a farm harvests crops by hand or uses automated machinery answers this basic question
How to produce
System where a central government makes all major production decisions and sets economic targets
What is a Command Economy
Name one real-world nation that historically or currently operates as a Command Economy
North Korea, Cuba
The level of competition in a Command Economy
None / State Monopoly
Name two of the four everyday resources that scarcity applies to
Money, Time, Labor, or Land
Allocating high-tech smartphones to premium markets and basic flip phones to budget buyers answers this question.
For whom to produce
System blending free market forces with strategic government regulation and public services
Mixed Economy?
In Marxist theory, this ultimate classless and stateless society requires the state to "wither away"
Communism
The main motivator for businesses and private individuals in a capitalist framework.
Profit / Personal Reward
Trading goods directly for other goods without using money
Bartering
Production methods that rely heavily on automated systems, tools, and factories rather than human workers
What is Capital-Intensive Production
System where essential major industries are publicly owned for equity, while minor sectors remain private
Socialism
Nordic nations like Sweden and Denmark are often cited as examples of this system due to high social safety nets paired with market activity
Socialism
In a mixed economy, the government acts primarily as a "referee" to enforce laws and protect these
Consumers / Citizens
The issue where a barter transaction fails because one party does not want what the other is offering
What is the Double Coincidence of Wants?
Identifying consumer demand, price signals, and available resources are key factors in answering this question
What should be produced
An economic system that relies on central government planners to dictate production quotas, assign labor, and set price ceilings.
Command Economy
Voluntary exchanges between buyers and sellers, along with price signals, dictate the marke
Capitalism
The five key characteristics used to evaluate economic systems include Property Rights, Economic Freedom, Role of Government, Competition, and this driving force
Incentives