chapter two: free enterprise and other economic systems Flashcards
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
