BASIC PROBLEMS OF ECONOMIC ORGANIZATION – QUESTIONS Flashcards
Name 3 fundamental economic problems common for every human society.
Moodle
What to Produce?
How to Produce?
For whom to Produce?
What commodities are to be produced and in what quantities?
How shall goods be produced?
For whom shall goods be produced?
Are these problems the same for all economies?
fundamental economic problems
Yes. And there are three basic questions of economics:
What commodities are to be produced and in what quantities?
How shall goods be produced?
For whom shall goods be produced?
What´s the difference between input and output?
Moodle
Inputs are commodities or services used by firms in their production processes. An economy uses its existing technology to combine inputs to produce outputs.
Outputs are the various useful goods or services that are either consumed or employed in further production.
Divide factors of production into 3 main categories.
Moodle
Land - or more generally natural resources – represents the gift of the nature to our productive processes. It consists of the land, energy resources, and non-energy resources.
Labor - Labor consists of the human time spent in production.
Capital - form the durable goods of an economy, produced in order to produce yet other goods.
Name some nature resources.
wood coal oil gas ore
What is the main crucial input for an advanced industrial economy?
Moodle
The most crucial input for an advanced industrial economy is labor.
Which input isn´t produced in order to be directly consumed?
x
What characteristics are typical for command economy?
Moodle
The government answers the major economic questions through its ownership of resources and its power to enforce decisions.
Who makes the main decisions about production and consumption in a market economy?
Individuals and private firms make the major decisions about production and consumption.
Jednotlivci a soukromé firmy dělají hlavní rozhodnutí o produkci a spotřebě.
Explain “The commodities that yield the highest profit”. What economy is it typical for?
Moodle
It is tipical for market economy.
Firms produce the commodities that yield the highest profits (the what).
Firmy produkují komodity, které přinášejí nejvyšší zisky (co vyrábět).
Is it possible have 100% market economy? Why / why not?
not
What is the role of government in a mixed economy?
Moodle
Government sets laws and rules that regulate economic life, produces educational and police services, and regulates pollution and business.
Vláda stanovuje zákony a pravidla, které regulují hospodářský život, produkují vzdělávací a policejní služby a regulují znečištění a podnikání.
What does the law of scarcity say?
Goods are scarce because there are not enough resources to produce all the goods that people want to consume.
What are unattainable choices in the PPF?
Production above the production possibilities frontier (on the right)
Where would be the point expressing a choice among alternatives if some resources aren´t used in the best possible way?
x
How would you describe an economy operating on the frontier (the PPF)?
The maximum amounts of production that can be obtained by an economy, given the technological knowledge and quantity of inputs available.
What are possible reasons for an economy being inside its PPF?
Unemployed resources (idle workers, idle factories, and idle land)
What are the major instruments of government policy?
Jaké jsou hlavní nástroje vládní politiky?
Taxes
that serve to reduce private expenditures
Expenditures
that induce firms or workers to produce certain goods or services
Regulations
or controls that direct people to perform or desist from certain economic activities (such as rules concerning the amount that firms can pollute
What is the aim of taxes?
Co je účelem daní?
that serve to reduce private expenditures
Explain the function of government in a modern mixed economy.
1 Vytvoření právního rámce pro tržní ekonomiku
2 Ovlivňuje alokace zdrojů ke zlepšení ekonomické efektivity
3 Tvoří programy ke zlepšení distribuce příjmů
4 Stabilizace ekonomiky prostřednictvím makroekonomických politik
1 Establishing the legal framework for the market economy
2 Affecting the allocation of resources to improve economic efficiency
3 Establishing programs to improve the distribution of income
4 Stabilizing the economy through macroeconomic policies
Why is the legal framework important?
Proč je právní rámec důležitý?
The government establishes the rules of the market.
Name some market failures.
Vyjmenujte některá selhání trhu.
Discrimination in labor markets. When some groups are discriminated against or excluded from high-paid jobs, government may decide to step in, outlaw discriminatory actions.
The breakdown of perfect competition. When monopolies or oligopolies collude to reduce rivalry or drive firms out of business, government may apply antitrust policies or regulation.
The presence of significant externalities – too much air pollution or too little investment in knowledge. Government may need to control the emissions of polluters or to support basic science.
In which situations can be income redistribution useful?
V jakých situacích může být přerozdělování příjmů užitečné?
The invisible hand might be marvelously efficient but at the same time produce a very unequal distribution of income.
Why do governments attempt to smooth out the business cycle?
Proč se vlády snaží vyrovnávat hospodářský cyklus?
to prevent chronic unemployment, economic stagnation, and price inflation and to encourage rapid economic growth.
