Capitalism Defined : Private Property, Markets and Firms - 1.6

Question 1

What is a capital good ?

Answer 1

An important type of private property which is the equipment, buildings, and other durable inputs used in producing goods and services.

Question 1

What is Capitalism ?

Answer 1

An economic system based on private ownership of assets and labor services, which organizes firms into markers for predominantly private benefit.

Question 2

What is a market ?

Answer 2

Markets are means of transferring goods and services from one person to another. They are a way of connecting people who may mutually benefit
by exchanging goods and services
through a process of buying and selling

Question 3

Why is the ratio scale used

Answer 3

The ratio scale is used to see the growth rate.

Question 4

What is meant by technology in economics

Answer 4

Technology refers to taking inputs including labour, machinery, and materials to create and output.

Question 5

What has constant technological improvements, increased in many countries?

Answer 5

Living standards, how connected the world is and how fast information travels.

Question 6

What is another issue caused by rapid technological improvement?

Answer 6

Increase in usage of fossil fuels and hence a problem has become Global Warming.

Question 7

What is an economic system?

Answer 7

An economic system is a way of organising the production and distribution of goods and services in an entire economy.

Question 8

What is meant by institution?

Answer 8

Institution generally means a set of laws (written and unwritten in some cases). However, in capitalism it is the laws and social custom regulating production and distribution in families, private business and government bodies.

Question 9

Whats is a marker?

Answer 9

Markets are means of transferring goods and services from one person to another.

Question 10

What re the condition to be met for an interaction to be considered as part of the market?

Answer 10

Must be reciprocated.
They are voluntary.
There must be some sort of competition.

Question 11

Firm vs Family

Answer 11

• The difference between a firm and a family is how quickly a firm can be born, expand, shrink and die.
• Remember firms also employ from the labour supply.
• Family dont hire workers to work, it’s mainly their family.

Question 12

What does privately owned mean?

Answer 12

Privately owned means ownership. The right exclude people from using it. It can also be sold by the owner.

Question 13

What does capital goods include

Answer 13

Durable and non-labour inputs. This doesn’t include some important inputs such as air, water and knowledge.

Question 14

What are the two ways Capitalism lead to rise in living standard?

Answer 14

Technology and Specialisation

Question 15

Why is specialisation key in living standards

Answer 15

• You learn by doing : self explanatory
• Difference in ability : This can be natural difference in skill, or soil hence some people are better at producing somethings than others
  -Economies of scale - It becomes more cost effective large number of units of some goods than producing smaller units.

Question 16

What is does unintended cooperation on global scale refer to.

Answer 16

This is essentially the world becoming more interconnected. Different parts of goods come from difference places.