Economic Systems Flashcards
1
Q
Free market economy
A
Where markets allocate resources through the price mechanism
2
Q
Planned or command economy
A
The government owns scarce resources and the state allocates resources and sets production targets and growth rates according to its own view of people’s wants.
3
Q
Mixed economy
A
Some resources are owned by the public sector while others are owned by the private sector
4
Q
What does the public sector typically supply
A
Public, quasi-public and merit goods (+ solutions to market failure)
5
Q
What are some options for rationing resources
A
Market price Income Need Postcode Nationality Gender Age Education
6
Q
Fixed capital
A
Machinery, buildings etc
7
Q
Working capital
A
Stocks of finished and semi finished goods (or components)
8
Q
What are free goods
A
Goods that do not use up any factor inputs when supplied.
They have 0 opportunity cost
