Ch2 Ch3 Sec1 Flashcards
Economic system
Organized way of providing for the wants and needs of people
Traditional economy
Intuits: Alaska and Canada
Survival in harsh areas
Advantages of traditional economy
Everyone know their role
High level of skill
Disadvantage of traditional economy
Struggles to find new ways of doing things
Low standard of living
Command economy
Prices production and everything govt controlled
Command economy advantages
Drastic changes made quickly
Heavy industry over consumer goods
Services are available to everyone with little or no cost
Command economy disadvantages
Fails to meet consumer want and needs
No incentive to work hard
Slow decision making and adjustments
Market economy
Goods and services are distributed in a free price system
Market economy advantages
Change is easy
Variety of goods
High consumer satisfaction
Market economy disadvantages
Fails to provide needs for all
Hugh degree of uncertainty
People fear change
Economic freedom
Choose how to use their money and jobs
Economic efficiency
Production possibilities is at full potential
Economic equity
Fairness to all, no discrimination
Economic security
Social security, Medicare
Full employment
Circular flow of economic activity
Economics growth
Americans want better stuff
Capitalism
Private citizens own the factors of production
Free enterprise
Where competition rules with minimum govt interference
5 characteristics of free enterprise
Economic freedom Voluntary exchange Private property rights Profit motive Competition
Role of entrepreneur
High rate of failure is too great to pass up
Search for profits leads to new goods
Consumer sovereignty
Consumer is always right
Consumer decides which sells and which doesn’t
Role of the govt
Protector- enforces laws against misleading advertising
Enforce laws on rights
No discrimination
