Unit 1.2

• A need is a necessity we cannot live without.e.g water

  A want is a desire that we can live without e.g a car
• Central purpose of economic activity is to satisfy the wants and needs of society
• 3 basic questions the economic problem try to answer:

  1. What to produce - Demand on the market
  2. How to produce - Using the 4 factors of production
  3. For whom to produce
• Economic agents are individuals, firms and the government that take part in economic activity
• Types of economies:

  • Command economy
  • Mixed Economy
  • Free market economy
• Command Economy - all resources are owned by the government or central authority, they decide what to provide
• Mixed Economies - Goods and services are produced by both the public and private sectors, work together to satisfy needs
• Free market sector - Buying and selling goods not under the control of the government by private sectors. Buyers and sellers decide the price of product