Quiz 2 Flashcards
3 Fundamental Questions
1) What to produce?
2) How to produce?
3) Who consumes it?
Laser Faire
- Government stays out
Theory of the invisible hand
- The idea that markets regulate themselves
Motivation Force
- people are self interested
Competition forces
- forces businesses to have low prices and good products
5 Economic Goals
1) Economic Freedom
2) Economic Growth
3) Innovation
4) Equity
5) Economic Security
Free Market Strengths
- Freedom
- Innovation
- Growth
Free Market Weaknesses
- Equity
- Security
Mixed Economy
A system where power is shared between people in the government
Who owns factors
Owned by people in the government and individuals
Who makes decisions
People in the government and individuals
Circular Flow Models (CFM)
In general cfm’s show the relationship between all stakeholders in an economy
Free market Stakeholders
Firms and businesses
Mixed economy stakeholders
Firms, households, and government
Factor Market: Households
Sell factors of production (labor)
