Chapter 2

Question 1

3 key economic questions:

Answer 1

What goods and services to produce?

How should these goods and services be produced?

Who consumes the goods and services?

Question 2

Economic goals and societal values

Answer 2

Economic efficiency

Economic freedom (less regulation, free to use money by one’s choice, one’s own opportunities as an individual or business)

Economic security and predictability

Economic equity

Economic growth and innovation

Balancing protecting the environment and the people versus economic growth and business

Full employment

Universal medical care - What are the costs? Why are there so many variations of costs in medical care?

Question 3

Types of economies and EXAMPLES!

Answer 3

Traditional
Europe 1800s

Market
Doesn’t truly exist, but nearly emerged during the Industrial Revolution

Mixed Market
The U.S.A baby!

Command economies/centrally planned
Soviet Union!

Question 4

3 shortcomings of Essentially Planned economies

Answer 4

People do not feel the need to work
There is a shortage of goods
The quality of goods is poor
Consumer wants or needs are neglected