2.9 Market economic system Flashcards
1
Q
What is a market system
A
- No government interventions
- Price mechanism determines the price of goods/services
2
Q
What are the characteristics of a market system
A
- Freedom of choice
- Limited government intervention
- Property ownership
- Self-interest
- Price mechanism
3
Q
Give me some PROs of a market system
A
- Incentive for profit so people work harder
- Competition decreases prices
- Competition increases range of choices for consumers
- Competition push firms to increase the
4
Q
Give me some PROs of a market system
A
- Incentive for profit so people work harder
- Competition decreases prices
- Competition increases range of choices for consumers
- Competition push firms to increase the quality of their goods/services
- Greater variety of goods/services
- More efficient use of scarce resources
5
Q
Give me some CONs of a market system
A
- Wealth gets concentrated in the hands of the rich. So they can buy more scarce factors of production. The gap between the rich and the poor increases
- Product quality may fall to increase profits
- Workers exploited
- Monopolies form as number of firms increases
- Environmental degradation usually ignored
