Microeconomics How Competitive Markets Work Flashcards
Chapter 2
1
Q
Resource allocation
A
the way in which a society’s productive assets are used amongst their alternative uses
2
Q
Market economy
A
market forces are allowed to guide the allocation of resources within a society
3
Q
Centrally planned economy
A
decisions on resource allocation are guided by the state
4
Q
Mixed economy
A
resources are allocated partly through price signals and partly on the basis of direction by government
5
Q
Capitalism
A
a system of production in which there is private ownership of productive resources, and individuals are free to pursue their objectives with minimal interference from government
6
Q
Invisible hand
A
term used by Adam Smith to describe the way in which resources are allocated in a market economy
