Chapter 6 Flashcards
What is economics?
The study of the production, distribution and consumption of goods and services
What are economic systems?
The way a society organizes the production, distribution, and consumption of goods and services
What is scarcity?
In economics, the idea that land (materials), labour and capital (money) limit the supply of what people want and need
What are the 3 factors of production?
Land, Labour, Capital
Explain how land affects scarcity
Land consists of all the materials found in the natural environment needed to produce goods and services, such as renewable resources
Explain how labor affects scarcity
Labour consists of the physical and mental effort needed to produce goods and services
Explain how capital affects scarcity
Consists of the money that people own or borrow, used to purchase equipment, tools, and other resources to produce goods and services.
How is the basic problem of scarcity solved?
Implementing an economic system
What are the 3 main types of economies?
Planned Economy
Market Economy
Mixed Economy
Explain a planned economy
- The government makes all the decisions about how to solve scarcity.
- It owns and manages the resources needed to produce things.
- It plans what will be produced and decides how to use limited resources
Explain a mixed economy
- A mixed economy combines private ownership and government control
- In mixed economies, the level of government involvement fluctuates depending what political party is in power
Explain a market economy
- the choices of individuals solve scarcity
- Private businesses own and manage resources. They sell their products to consumers, who make their own decisions about what to buy
- Businesses succeed if they produce what consumers want. Otherwise, they fail.
- The government does not get involved
Characteristics of a planned economy?
- Resources are publicly owned.
- The government makes decisions on how to use resources.
- Individual consumers have little influence on economic decision-making.
Characteristics of a mixed economy?
- Some resources are publicly owned and some are privately owned.
- Individuals and government both make decisions about what to produce.
- Individual consumers and government influence economic decision making.
Characteristics of a market economy?
- Resources are privately owned.
- Individuals make decisions on how to use resources.
- Individual consumers drive economic decision-making by choosing what to buy.
What is public good?
What’s best for society as a whole.
How to achieve public good through cooperation?
Individuals must consider each other and set aside their individual interests to achieve what’s best for society
How to achieve public good through individualism?
Some people believe that what’s best for each achieve individually adds up to what’s best for society
What does shift left mean?
More government involvement. Liberal position
What does shift right mean?
Less government involvement. Conservative position
What is Canada’s founding principal?
“peace, order and good government.”
What economic system does Canada use?
Mixed economy
What is the U.S.A. founding, principal?
“life, liberty and the pursuit of happiness.”
What type of economy does U.S.A use?
Market economy
