Power and Limits of Markets (Exam 2) Flashcards
1
Q
Resource allocation
A
- Decisions of a society to determine how resources are shared among society’s citizens
2
Q
Resource ownership
A
- Decisions of a society determine property rights over resources in a society
3
Q
Command system
A
- Rationing is done through a public, centralized planning, or communal method
4
Q
Market System
A
- Private, decentralized interactions between buyers/sellers to allocate resources
5
Q
Socialist system
A
Use public property as ownership
6
Q
Capitalism
A
Use private property as ownership
7
Q
Market capitalism
A
Economic system using private property ownership and private resource allocation decisions
8
Q
Command socialism
A
Economic system that uses public property ownership + public resource allocation decisions
9
Q
Market socialism
A
Economic system that uses public property ownership and private resource allocation decisions
10
Q
Command capitalism
A
Economic system that uses private property ownership and public resource allocation
11
Q
Efficiency of market capitalist
A
- Effective at generating efficient resource allocations because of reliance on comparative advantage
- Prices provide incentives
- Invisible hand
12
Q
Invisible Hand
A
- Self-regulating mechanism of market systems that generate allocation of resources based on self-interest;, competition, and comparative advantage
13
Q
Efficiency of command socialist
A
- Not well suited to generating economic efficiency
- Amount of information needed to determine and act upon comparative advantage would be far too extensive
- Less incentive for producers when prices are fixed
14
Q
Equity in capitalist systems
A
- Distributes wealth based on willingness and ability to pay
15
Q
Equity in command socialist
A
- More likely to achieve equitable resource allocation
