chapter two: free enterprise and other economic systems Flashcards Preview

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Flashcards in chapter two: free enterprise and other economic systems Deck (25)
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1
Q

what is an economic system?

A

the structure a society uses to pay its bills and develop its choices

2
Q

three key questions *****

A
  • what goods and services should be produced?
    -how should the goods and services be produced?
  • who consumes the goods and services?
3
Q

what goods and services should be produced?

A
  • each society must decide what to produce in order to satisfy needs and wants
  • the more you produce of some goods and services the less you produce of other goods and services (trade-offs and opportunity cost)
4
Q

how should the goods and services be produced>

A
  • there are countless ways to create all of the things we want and need, which all require capital (tools, equipment), land, and labor
    -ex. size and organizations of facilities, resources to use, time and effort communication
5
Q

who consumes the goods and services?

A
  • how are goods and services divided up?
  • how do societies distribute income?
  • how do we decide the worth of a factor of production?
  • factors of payment: income people receive for supplying factors of production (rents, wages, profits)
  • society places different values on diff. resources and products
  • ex. choices in products, the value/price of products, access to service
6
Q

econimic goals and societal values

A
  • economic efficiency
  • economic freedom
  • economic security and predictability
  • economic equity
  • economic growth and innovation
  • additional goals
7
Q

economic efficiency

A
  • dont waste - get the most out of what you put in it
  • the quality of economic activity in which resources are used and goods distributed in a way that generates the greatest benefits to produce and consumers
8
Q

economic freedom

A
  • you get to make your own economic choices
9
Q

economic security and predictability

A
  • assuring people that goods and services will be available
  • providing aid for retirement and in different times (social security, unemployed, welfare)
10
Q

economic equity

A

an equal opportunity to buy something someone else does

11
Q

economic growth and innovation

A
  • more is better, more production
12
Q

standard of living

A
  • how well you live economically
  • the material well-being of the avg. person in a given pop.
13
Q

traditional economy

A
  • simple economy
14
Q

market economy

A
  • you make your own decisions
15
Q

centrally - planned (command economy) - Communism

A

the govt. owns all resources, the govt. decides what goods and services will be produced

16
Q

mixed economy

A

combines the advantages and disadvantages of three diff. types of economies: market, command, and traditional.
- govt. has a large role in the military, international trade, and national transportation
- driven by the motivation of self interest of individuals
- allows federal govt. to safeguard its people and market

17
Q

market

A

a place where parties can gather to facilitate the exchange of goods and services

18
Q

specialization

A

concentrating on one area of work

19
Q

buying and selling

A

this person sells something and another buys it

20
Q

free economy market

A

make your own decisions

21
Q

households and firms

A
  • firms produced goods and services
  • households receive the goods and services
  • firms factor payments - rent, interest, profit and wages
  • households - services of factors of production
22
Q

factor market

A

where you pick up the things you need to produce

23
Q

product market

A

where you produce/sell the thins you make

24
Q

self - regulating nature

A

-people want to make as much profits from their product as possible, this creates competition for producers, make better product to compete with other producers
- create the ‘’ invisible hand’’

25
Q

competition

A