so what does economics mean an economy is how a society organizes its resources they have to do this because human beings are naturally greedy that means our wants are never satisfied yet the planet only has so many re resources to go around this creates scarcity everyone can't have everything they want so a society will create an economy to decide how to allocate resources the way the economy is organized reflects the ideology of that society when a society is organizing their economy they must decide how to answer three basic questions what to produce are you going to produce essential Goods like vegetables or are you going to focus on consumer goods like potato chips how to produce it are you going to invest in the latest technology or are you going to ensure full employment by focusing on human capital who gets it how are you going to distribute all these resources are you going to have the government ensure everyone has access to Goods or are you going to allocate those resources based on people's ability to pay for it themselves there's three different ways or systems to answer these questions they're referred to as market economies planned economies and mixed economies in a market economy what to produce is decided by consumer demand how to produce it is determined by the supplier of the product and who gets it is determined by the price system and wages we're going to go into more detail later this system is also called capitalism free market or free enterprise or private Enterprise because private individuals control the economy and this sits on the right side of the economic spectrum in a planned economy all three questions are answered by the government in order to organize all of the resources to encourage equality a central agency will decide what how and who that's why it's called a plann economy although it's also known as socialism communism or public Enterprise because the government or public institutions control the economy this type of econom is collectivist so it sits on the left side of the economic spectrum then there's a mixed economy well most economies are not purely capitalist or socialist a mixed economy wants to take the best from both the private and public Enterprise and it sits in the middle of the economic spectrum you can see here that the answers to the basic economic questions are a mix of individual competition and government intervention to promote cooperation and equality so you can see there's a variety of ways a society can organize their economy to try and satisfy individual wants with a limited amount of resources in the next lesson we're going to look at capitalism in more detail we start with capitalism because it's Origins begin with the Enlightenment and the promotion of liberal ideologies for