Ch. 2 Flashcards
list the two major branches of economics
macroeconomics and microeconomics
macroeconomics looks at …
the operation of a nation’s economy as a whole
microeconomics looks at …
the behaviour of people and organizations in particular markets
resource development is the study of …
how to increase resources and the creation of the conditions that will make better use of those resources
the wealth in nations in 1776 defined capitalism as …
a system of rights and freedoms
Adam smith believed that …
people will work hard if they have incentives for doing so (that is- if they know they will be rewarded)
capitalism is know as …
the economic system that has led to wealth creation in much of the world
under capitalism, all or most of the factors of production (4 examples), are owned by …
(land, factories, railroads and stores) owned by individuals
describe/define capitalism
individuals seeking profits produce goods and services. goods and services are sold in a free market to those who can pay for them
define/describe communism
the government decides what will be produced and who will consume the results of that production
define/describe socialism
some free market and some government allocation
capitalism is the popular term used to describe …
free-market economies
the free market is one in which …
decisions about what to produce and in what quantities are made by the market
how does a free market work?
many buyers and sellers trading freely determine the prices at which they will exchange goods and services
how are prices determined in a free market?
the constant interplay between supply and demand determines an equilibrium price at which a transaction will occur
define the “equilibrium point”
place where quantity demanded and quantity supplied meet. This is the price at which a transaction will occur
list the four degrees of competition that exist
perfect competition, monopolistic competition, oligopoly and monopoly
list the four degrees of competition from least to most sellers
monopoly, oligopoly, monopolistic competition and perfect competition
perfect competition exists when …
there are many sellers in a market and no seller is large enough to dictate the price of a product
perfect competition is what would exist at a …
flea market, or an ethnic community where everybody is a small player and nobody dominates
An oligopoly occurs when … and exist in industries that produce… (6)
a few sellers dominate the market, products in the areas of oil, gas, tobacco, automobiles, aluminium, and aircraft
one reason some industries remain in the hands of a few sellers is that …
the initial investment required to enter the business is tremendous
a monopoly occurs when …
their is only one seller for a good or service, and that one seller controls the total supply of a product and the price
traditionally, monopolies were common in areas such as … that were considered …
water, electricity and telephone services. essential services
under capitalism, who decides what? (4)
business people decide what to produce, how much, what to charge and how much to pay workers
communism is an economic and political system in which …
the state (the government) makes almost all economic decisions and owns almost all of the major factors of production
socialism is an economic system based on the premise …
that some, if not most, basic businesses- such as steel mills, coal mines, and utilities- should be owned by the government so that profits can be evenly distributed among the people
