Economic Systems (C6) Flashcards
Economics
The study of the distribution, production and consumption of goods/services
Economic system
The way a society organizes its economy (PDC of goods/services)
Economy
The resources and processes involved in the PDC of goods/services
Scarcity
In economics, the idea that land labour and capital limit supply of what people want and need
(Basically degree of how many people want it vs how much there is, the idea that resources are limited)
Why would scarcity happen?
Too high demand, too low supply (Could be due to worker strike or manufacturer problem), some people buy in bulk
What are the 3 basic factors of production (and scarcity)?
Land,Labour, Capital
Land
- ## All the materials in the natural environment required to produce goods/services (e.g. trees, gold, oil, etc.)
Labour
Physical + Mental effort required to produce goods/services; e.g. construction workers building a house
Capital
Money that people own/borrow, used to purchase goods/services (e.g. paying for materials)
Privately vs publicly owned
Private: Economy (part) that is controlled by businesses and individuals
Public: Economy (part) owned and controlled by the govt and are paid for by taxes
Planned vs Mixed vs Market Economies
Planned: Resources public, govt big individual small
Mixed: So-so, medium medium
Market: Resources private, govt small individual big
Public good
What’s best for society as a whole
Shifts: Left vs Right
Left: More govt, more public (Liberal)
Right: Less govt, more private (Conservative)
Crown corporation
A company owned by the Crown (to provide services, to promote development, support Canadian identity) (e.g. Air Canada (Former))
US vs Canada economic systems
US: life, liberty and happiness (more right-lean, market)
- Right shift: Reagan
- Left shift: Roosevelt
Canada: Peace, order and good govt (middle, mixed)
- Right shift: Mulroney
- Left shift: Pearson
How do market economies work?
All decisions made by individuals (consumer choices); Supply/demand, competition
Consumers
People who use products and services
Demand
The wants and needs of consumers for products/services
Producers
Those who create products/services
Supply
Products/services created by producers
Analysis: Price, supply, demand
Demand goes up then supply goes down then price goes up, which means demand goes back down again (gradually), supply goes up; Cycle of Equilibrium
Competition
In economics, rivalry among producers to sell products to consumers
Analysis: Competition
If two companies in same sector, they will compete and both will lower their prices to get more customers
Monopoly
Opposite of competition; only one producer gets to sell
