Economic Agents & Economic Systems

Question 1

Economic Agents

Answer 1

An economic decision maker who can recognise that different factors influence and motivate different economic groups.

Question 2

Consumer

Answer 2

One who consumes a produced good or service, generally by financial purpose.

Question 3

Producer

Answer 3

Economic agents whose role is to transform factors of production into goods and services to sell. They can be public/private/voluntary.

Question 4

Government

Answer 4

An economic agent which provides rules for how firms and consumers should interact. This is evident in developed economies. An economy with higher levels of income have better services.

Question 5

Human Needs

Answer 5

The minimum goods and services required for human survival (limited)

Question 6

Human Wants

Answer 6

Desire for goods and services = needs + non essential items/luxuries (unlimited)

Question 7

Factors of Production: Land

Answer 7

Any natural resource, except humans, used in production – eg minerals, fossil fuels, livestock, crops, rivers.

Question 8

Factors of Production: Labour

Answer 8

The human input to production by muscle or brain, skilled or unskilled.

Question 9

Factors of Production: Capital

Answer 9

Man-made items which help in the production of other goods and services – eg tools, machines, factories

Question 10

Factors of Production: Enterprise

Answer 10

The entrepreneur is the decision maker and risk taker in a business. He/she is responsible for putting the money up to start the business and organising the other factors of production within it.

Question 11

The four types of economic systems

Answer 11

1. Traditional economy
2. Command or planned economy
3. Free market economy
4. Mixed economy

Question 12

5 Characteristics of Command Economy

Answer 12

1. Government creates a central economic plan
2. Government allocates all resources according to central economic plan
3. Plan sets priorities for production of goods and services
4. Government owns monopoly businesses
5. Government creates laws and regulations to enforce central economic plan

Question 13

Example of Command Economy

Answer 13

China: After World War II, Mao Tse Tung created a society ruled by Communism. He enforced a strictly planned economy. The current leaders are moving toward a market-based system. They continue to create five-year plans to outline economic goals and objectives.

Question 14

6 Characteristics of Market Economy

Answer 14

1. Private Property
2. Freedom of Choice
3. Motive of self interest
4. Competition
5. System of markets and choices
6. Limited Government

Question 15

Example of Market Economy

Answer 15

Most developed nations

Question 16

8 Characteristics of Mixed Economy

Answer 16

1. Government protects people and the markets
2. Government has large role in military, international trade and transportation
3. Private Property
4. Supply x Demand = Price
5. Driven by self interest
6. Government protects people and the markets
7. Government may own key industries
8. Governments manage social welfare programmes