What to produce?
- Remember that resources (land, labor, capital, entrepreneurship) are scarce or limited. We cannot have everything; we must make choices.
How to produce?
- If labor is cheap and capital is expensive, a labor-intensive technique would be considered and vice-versa. The prices of labor and capital are determined by the demand for and supply of labor and capital respectively.
For whom to produce?
- Goods are produced for those people who have the paying capacity. The capacity of people to pay for goods depends upon their level of income.
Credits:
Created with images by Alexas_Fotos - "piggy bank money dollar bill"