Flashcards in Chapter 2- Section 1 Deck (13)
An organized way of providing for the wants and needs of their people
Economy or economic system
What are the three major kinds of economic systems that exist?
Traditional, command, and market
A traditional economy is based on what?
Traditions, habits, rituals, or customs
What are advantages of a traditional economy?
Everyone knows which role to play, little uncertainty exists over what to produce, little uncertainty exists over how to produce, for whom question it to turn by the customs and traditions of the society
What are the disadvantages to traditional economies?
Scrooges new ideas and new ways of doing things, the strict rules in the traditional society have the effect of punishing people who act differently or break rules, the lack of progress leads to a lower standard of living than other types of economic society
What is a command economy?
One in which a central authority makes most of the what, how, and for whom decisions
Are the advantages of a command economy?
Can change direction drastically in a relatively short time, many health and public services are available to everyone at little or no cost, regardless of income
What are the disadvantages of a command economy?
It is not designed to meet the wants of consumers, the system does not give people the incentive to work hard, the command economy requires a large decision-making bureaucracy, does not have the flexibility to deal with minor, day to day problems, people with new or unique ideas find it difficult to get ahead in a command economy
What is a market economy?
People and firms act in their own best interest to answer them what, how, and for whom questions
The market economy, people decisions act as what?
Are some advantages of a market economy?
Time it can adjust to change, the high degree of individual freedom, relatively small degree of government interference, decision-making is decentralized or not concentrated in the hands of a few, variety of goods and services available to consumers, high degree of consumer satisfaction
What are disadvantages of the market economy?
It does not provide for the basic needs of everyone in the society, it does not provide enough of the services of people value highly, relatively high degree of uncertainty workers and businesses face as a result of change, they can fail of three conditions are not met