Q1 ALLOCATION Flashcards
individual choices
made by the people acting separately from one another
social choices
made by the government to satisfy the needs of society
trade off
sacrificing one product for another
benefits
positive outcomes or gains
setbacks
losses
opportunity cost
refers to the value of alternative given up to obtain another item or second best alternative
high opportunity
more setbacks, less benefits
low opportunity
less setbacks, more benefits
effects of smart decision making for students
-future career
-better time management
effects of smart decision making for family
-budgeting & career move
allocation
deals with the distribution of economic resources to answer
the problem of scarcity
economic system
provides a framework for societies to properly
use their limited resources and answer the
problem of scarcity
conservation
Effective, orderly and wise use of resources
3 types of economic system
Command (or planned system)
Market (or capitalist system)
Mixed (where there are both)
8 command system characteristics
-State makes all the decisions
-Owns all resources except labor
-Incentive system; equality on people
-Mass production
-Rationing goods in the market (distribution)
-Little freedom
-Main priority is welfare of the state
-Prices are governments decision
-Source of info is planned
8 market system characteristics
-Private individuals and organizations make all decisions
-Private ownership of resources
-Incentive system; Profit for capitalists and good-quality, affordable products for consumers
-Production is whatever is efficient and profitable
-Distribution is based on interplay on demand and supply
-Much, if not absolute freedom
-Main priority is welfare of consumers
-Prices depend on interplay of demand and supply
-Source of info is based on market
What to produce in a Market system economy?
Consumers base their purchases on trend
How much to produce in a Market system economy?
Depends on interplay of demand and supply
How to produce in a Market system economy?
Depends on the individual business, but it must be profitable
For whom to produce? in a Market system economy?
People who have money to buy more (encourages hard work and more investments)
Capitalism
private ownership of businesses and marketplace competition
Adam Smith
known as the “Father of Capitalism”
Lassiez Faire
principle of governments non-interference
(in French means “Let Do”)
What to produce in a command system economy?
depends on the person, dictator a group of government officials
