The Decision Makers and Their Choices
Three types of decision makers operate in any economy. The first is
consumers. Sometimes we think of consumers as being individuals and
sometimes we think in terms of families or households. Consumers
purchase various kinds of goods and services with their income; they
usually earn their income by selling their labour services to their
employers.
The second type of decision maker is producers. Producers may be firms
that are interested in earning profits or they may be non-profit or
charitable organizations. In any case, producers hire workers, purchase or
rent various kinds of material inputs and supplies, and then produce and
sell their products. In the cases of charitable organizations, their products
are often distributed for free.
The third type of decision maker is government. Like producers,
governments hire workers, purchase or rent material and supplies, and
produce goods and services. Unlike most producers, however,
governments usually provide their goods and services at no direct cost to
the final user; their operations are financed not by revenue from the sale
of their products but instead by the taxes they collect from individual
consumers and producers. In addition to producing and providing many
goods and services, governments create and enforce laws and design and