Markets and Economies

Question 1

what are markets?

Answer 1

they are a method for allocating scarce resources.

Question 2

mixed economies

Answer 2

combine free markets and government intervention

Question 3

pros of free market economy

Answer 3

efficiency

entrepreneurship

choice

Question 4

cons of free market economy

Answer 4

inequalities

non profitable goods may not be made

monopolies

Question 5

pros of command economies

Answer 5

maximise welfare

low unemployment

prevent monopolies

Question 6

cons of command economies

Answer 6

poor decision making

restricted choice

lack of risk taking and efficiency

Question 7

Mixed economy has a

Answer 7

public sector and a private sector

Question 8

government

Answer 8

is the public sector

Question 9

privately owned businesses

Answer 9

private sector

Question 10

the three influential economic thinkers

Answer 10

Smith

Marx

Hayek

Question 11

Adam Smith

Answer 11

shaped traditional economic theory

liked free markets. described invisible hand would allocate resources in societies best interests.

consumers and producers motivated by self interest. in free markets consumers demand and producers supply lead to price levels set at point which benefits both.

Question 12

Karl Marx

Answer 12

critical of free markets

small ruling class dominated and exploited larger working class of wage earners.

let to rise of communism in 20th century. communist countries collapsed.

Question 13

Friedrich Hayek

Answer 13

keen supporter of free market system critic of command economies.

argued that governments shouldn’t intervene in allocation of scarce resources because of they’re lack of information about how to allocate in the most beneficial way to society.

he believed individual consumers and producers have best knowledge of what they want or need.