Topic Two, Lesson One: The Three Key Economic Questions

How should these goods and services be produced?

Solar power, public school systems, manual labor, factory, farms, nuclear plants, etc.

Describe the economic goals that determine how a society answers the three economic questions.

1. Economic Security and Predicability 2. Economic Freedom 3. Economic Growth and Innovation

Define the characteristics of a traditional economy.

1. Stick to traditional way of producing goods 2. Slow to adapt to change 3. Less technological 4. Value traditions over economic growth

Identify the three basic economic questions that all societies must answer.

1. What goods and services should be produced? 2. How should goods and services be produced? 3. Who will consume the goods and services?

Which is more important economic goal for society in a traditional economy, equity or growth? Cite evidence to support your answer.

Equity is more important, and evidence of this that often people in such societies work to support the entire community, so sharing is a ritual aspect of economic life; also, economic success in such societies is attached by meeting the community's needs, not by raising the standard of living through economic growth.

Who will consume these goods and services?

Landowners, entrepreneurs, factory workers, rich people, poor people, unemployed people, teachers, students, etc.

What goods and services should be produced?

National defense, education, electric cars, newspaper, insurance, shoes, etc.

People in societies with traditional economies tend to rely on established technologies, have access to limited goods, and lack modern conveniences, but they love what they do for work. What part of the preceding statement is an opinion? Explain your answer.

People in societies with traditional economies love what they do for work; we cannot prove this statement.

In a society that favors economic equity over economic freedom, who would benefit? Explain.

Poor people, unemployed people, and others with lower incomes, in a society favoring economic freedom, people generally consume only what they can pay for themselves; in a favoring economic equity, people's share of economic pie would be more equal.

A key innovation during the Industrial Revolution was the steam engine. How did the steam engine contribute to the growth of the textile, or cloth-making, industry?

The steam engine increased the speed of the textile machines and thus the efficiency of textile production.

Under "Who consumes the goods and services that are produced," use context clues to come up with a definition of the word "values."

The things that matter most to people.

How does the introduction of robots into an automobile factory illustrate the economic goal of efficiency?

Using robots instead of manual labors reduces labor costs, helping the auto manufacturer maximize what they can produce using the resources they have.