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23 Cards in this Set
- Front
- Back
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What is an economic system?
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A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and teh command system are the two general types.
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What is a command system?
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Is also known as socialism or communism, Government owns the businesses.
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What is a market system?
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Generally known as capitalism. Characterized by the private ownership of resources.
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What does the term "laissez-faire" refer to?
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Let it be.. less government intervention
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In a market system, who owns most of the property resources? Why is this important to an economist?
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private ownership
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What is the difference between "freedom of enterprise" and "freedom of choice"?
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One is business one is the consumer side
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How does "self-interest" influence economic decisions?
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Pg 31
that each economic unit tries to achieve its own particular goal, which usually requires delivering something of value to others |
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Why is competition an important part of the market system?
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Lots of buyer larger sellers acting independently
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What is a "market"? What function does it provide any market system?
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Pg32
is a institutionor mechanism that brings buyers and sellersinto contact. |
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What is the relationship between technology and capital goods?
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Pg 32
technology and capital goos are important because the most direct methods of production are often the least efficient. the only way to avoid inefficiency is to rely on captial goods. example: it would be ridiculous for a famer to go at production with bare hands. The use of tractors, and heavy equipment com increase output. |
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How do economists define specialization?
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Pg 33
is the use of resources of an individual, firm, region, or nationto produce one or a few goods or services rather that the entire range of goods and services. |
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What is the "division of labor"? How does it contribute to society's output?
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Pg 33
Human specialization Specialization makes use of differences in ability Specialization fostrers learning by doing. Specialization saves time. |
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How does geographical specialization influence output?
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Pg 33
More efficient use of local resource you have, oranges in florida, corn in illinois. |
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What is barter?
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Pg 33
Swaping good or services, must have coincidence of wants |
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Identify some reasons why all modern societies eventually invented "money".
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Get rid of bartering…
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What does the textbook identify as the five fundamental questions that pertain to market economies?
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1.what goods and services will be produced
2.How will the goods and service be produced 3.who will get the goods and services 4.How will the system accommodate change 5.How will the system promote progress Will the employees benefit. Pg 34 |
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What does the term consumer sovereignty refer to?
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Pg 35
You ultimately decide who wins or loses. Crucial in determining the type and quintiles of goods produced. |
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What is "creative destruction"?
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Pg 37
rapid spread of industry, technology |
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What is the significance of the "invisible hand" concept?
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Pg 38
Buyers and sellers somehow help the economy |
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Identify several reasons why the command economies around the world failed.
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The coordination problem-what to build, how many,
The incentive problem- there was no incentive to adjust out put of products |
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What is the purpose of the circular flow model?
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Pg 39
There are two types of markets product and resource markets |
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What is the difference between resource markets and product markets?
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Pg 40
resource- households sell, businesses buy product-businesses sell households buy |
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What are the roles of businesses and households within the circular flow model?
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household- sell resources, buy product
business- buy resources, sell product |
