Week 3 Flashcards
What is absolute advantage?
That person is better at producing both goods given the same amount of resources in same amount of time
What is complete specialization
When you specialize fully in one production
What is comparative advantage?
When someone can produce a good or service at a lower opportunity cost.
What is a capitalistic economy?
Also known as free market economy
One in which the economic problem of scarcity is dealt with by the interactions and decisions of households.
Capitalist economic question what?
Consumers ultimately determine what will be produced
Capitalist answering whom question in market economy?
Determined by the ability of consumers to purchase desired goods or services
Capitalist economy how question
Determined by privately owned firms deciding which factors of production to utilize in the production of goods and services
What is a command economy?
An economy where government or some designated central authority coordinated the allocation of resources
Command economy what question?
What products get produced and the production levels of various goods and services are assigned solely by government
Command economy how question
How production o cuts is determined by the government which allocated publicly owned resources needed to achieve targeted production goals, including labour.
Command economy for whom question
For whom is determined by the government which sets the prices in both the goods and factor markets. There is no profit for forms as everything is owned by the government.
Benefits of mixed economy?
Provides the best of both worlds- efficiency and innovation that free markets provide and also mitigate the impact of the deficiencies of a market system.
