Chapter 1: Economic Systems Flashcards
What are the factors of production
Entrepreneurship
Labour
Land
Capital
Economic system definition
How the factors of production are organized to produce goods and services.
What are three economic issues?
WHAT is being produced
HOW is production taking place(quality and by whom)
FOR WHOM are they being produced
What are the three basic economic systems
Planned economic
Mixed market
Free market
What is being produced in all 3 market systems
Planned: what government approves
Free:all required items
Mixed: consumer willing to pay and government important
How is production taking place in all 3 market systems
Planned:no freedom of choice
Free:competing businesses
Mixed:public and private sector
For whom is it being produced in all 3 market systems
Planned: government decision
Free:those who can afford it
Mixed:government and consumer needs considered.
Differences between free market and planned economy
Owned by private-owned by government
Freedom to start business-government regulation
Supply and demand-price control
Communist countries/planned economic countries
North Korea
Cuba
Socialist leaning countries
China, Venezuela.
Mixed economic countries
France, Sweden
Capitalist leaning countries
U.S, japan
What are the advantages of a planned economic system
- In theory no unemployment(all citizens employed by government)
- All citizens have access to essential services
What are the disadvantages of a planned economic system
- Consumers needs very low regarding provision of services.
- Limited choice of products (government regulated)
- Little reason to work hard
- price controlled by government
What are the advantages of a free market/capitalism system
- Hard work=success
- Entrepreneurship, competition= better price and quality.
- Variety of products/services
- Resources privately owned and used effectively(recycled and reused)