Economics Chapter Two Study Guide: Flashcards
Three Basic Questions all societies must answer?
What will be produced? Answered in the product market
How will it be produced? Answered in the resource market
For whom will it be produced for? Answered in both markets
Goal of a traditional Economy:
Security and predictability
What will be produced in a traditional Economy:
What is needed to survive
How will something be produced in a traditional economy?
Work is divided along gender lines and based on traditions and customs.
Whom will it be produced for in a traditional economy?
Whoever needs it the most (people and families)
What is the goal of a market economy:
Efficiency, Freedom, Growth and innovation
What will be produced in a market economy?
What is demanded
How will it be produced in a market economy:
By privately owned specialized businesses.
Whom will it be produced for in a market economy?
Whoever wants to pay for it. Voluntary exchange between buyer and seller.
What is the goal of a command economy?
Equality
How will things be produced in a command economy?
By government-owned businesses
Whom will it be produced for in a command economy?
Allocation-everyone equally, government decides who will receive the goods.
What will be produced in a command economy?
What the government says you need
Who wrote the communist manifesto?
Karl Marx, wanted government to own the factors of production.
Socialism:
Uses democratic means to distribute wealth evenly.
Communism:
Authoritarian socialism
