Chapter2 Flashcards
Traditional economy
Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
3 key economic questions
What goods and services should be produced?
How should G and S should be produced?
Who consumes goods and services?
Market economy
Economic system in which decision on production and consumption of goods and services are based on voluntary exchange in markets
Command economy
Economic system in which a central authority is in command of the economy
Mixed economy
Market based economic system with limited government involvement
4 kinds of economy
Command
Mixed
Traditional
Market
Specialization
Everyone specialize -do something that are good at- because we can’t do everything
Household
A person or a group that live together
Firms
Businesses
Self regulation and the marketplace
Household provides the factors of production and firms the finish product
Advantage of the free market
Economic efficiency
Economic freedom
