Economic Questions, Economic System, Circular Flow

Process in transforming goods into usable forms

3 factors of production

3 basic economic questions

The society must know the people's needs in order to satisfy their needs and wants

Refers to the mode of production used

Manual Labor

Involves Machinery and tools

Its concern is how it will be distributed among the members of the society

Set of social institutions that aim to answer the three economic questions

4 types of economic system

It is based on how things are done in the past, Primitive

The government dictates what to produce, for whom to produce and how to produce

There is no intervention of the government
A.K.A Laissez-faire

Price

There is an intervention of the government but at the same time there is freedom of choice

Composed of individuals who exhibit certain needs and wants

Organization that transform resources into products

Firms supply what the household demands

Household supply what the firms demand

Refers to natural resources

Composed of people who are involved in the production of goods and service

Composed of man-made that are used to produce other goods

Person who combines capital, land and labor and comes up with the product