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AQA GCSE · Question 18 · How markets work
Explain one key economic decision for a producer.
Explain one key economic decision for a producer.
How to approach this question
1. State one of the three basic economic questions from a producer's perspective (What, How, or For Whom to produce). 2. Briefly explain what this decision involves.
Full Answer
One key economic decision for a producer is 'what to produce'. This involves deciding which goods or services the business will offer to the market. This decision will be based on factors like the firm's resources and expertise, consumer demand, and the potential for profitability.
Every producer must face the three fundamental economic questions:
1. **What to produce?** Deciding which product or service to create and sell.
2. **How to produce?** Deciding on the production method, for example, whether to use labour-intensive or capital-intensive techniques.
3. **For whom to produce?** Identifying the target market or consumer group for the product.
Common mistakes
Giving a decision that is too specific (e.g., 'what price to charge') without linking it to one of the fundamental questions, or giving a consumer's decision instead of a producer's.
Practice the full AQA GCSE Economics Paper 1
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