Chapter 13: Market economic system Flashcards
Public sector
The part of the economy controlled by the government
State-owned enterpirses (SOE)
Organizations owned by the government which sells products
Privatisation
The sale of public sector assets to the private sector
Price mechanism (D & S)
The system by which the market forces of demand and supply determine prices
Market failure
Market forces resulting in an inefficient allocation of resources
Free rider
Someone who consumes a good or service without paying for it
Allocative efficiency
When resources are allocated to produce the right products in the right quantities
Productive efficiency
When products are produced at the lowest possible cost and making full use of resources
Dynamic efficiency
Efficiency over time as a result of investment and innovation
Economic efficiency
When scarce resources are used in the most efficient way to produce maximum output
