<1.4 ECONOMIC SYSTEMS>

--THINK AHEAD--

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"Referring back to the castaway clip, what role was he playing when he decided he 'wanted' coconut water—was it as consumer or producer? 

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"What about when he decided on 'how' to extract the water? Was it as the consumer or producer?"

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"Finally, what about when he decided that he would be the 'for whom' that gets to drink the water? What right did he have regarding the ownership of the water, and what rationing method did he use as the producer to decide?"

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"You should realise that 'What to produce?' was determined by the castaway as the consumer, who informed himself as the producer, what was wanted."

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"'How to produce?' was determined by the castaway as the producer wishing to be as productive and least wasteful of his precious time as possible, and..."

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"And finally, 'For whom to produce?' was decided by the fact that the castaway was the owner of the factors of production and so decided the consumption of the water was his 'income' or 'reward' for providing these resources."

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"So in terms of the 'system' used by the castaway to make these 3 decisions, we can say that the producers responded to the wants of the consumer and produced the goods most desired, and then the output was consumed by the owners of the factors of production."

"In the real world the consumer informs the producer about what they want via the price mechanism..."

FREE MARKET SYSTEM

--FREE MARKET SYSTEM--