Macro Econ chapter 2 - Who, What, & 3 Hows

What goods and services will be produced?

“Dollar Votes”, allow consumers to indicate with goods and services what should be produced, determines which products and industries survive or fail. (If it doesn’t buy it gets booted.)

How will goods and services be produced?

Minimize the cost per unit by using the most efficient techniques; the best technology, prices of the necessary resources.

Who will get the output?

Consumers with the ability and willingness to pay will get the product; Ability to pay depends on income of person spending.

How will the (market economic) system accommodate change?

Changes in consumer tastes, technology, resource prices or availability

How will the system progress?

Technological advance, creative destruction: The hypothesis that creation of new products and production methods destroys the market power of existing monopolies.