Quiz 3 Flashcards
was born in what is now Germany in 1818 and grew up in middle-class comfort
Marx
would be exiled from his homeland for becoming involved in radical politics
Marx
During his Travels, Marx, met the son of a factory worker
Friedrich Engels
Marx concluded that the _____ had created a system of wage slavery
Industrial Revolution
The whole industrial system, Marx reasoned, was based on
the exploitation of workers
Marx assisted by Engels laid out ideas of worker overthrow in
the Communist Manifesto(1848)
still has an economy with mostly command elements
North Korea
Advantages of command economies
They seek to provide for everyone
Leaders in a command economy can use the nation’s resources to produce items that may not make money in a market economy
Disadvantages of command economies
Central planners often have little understanding of local conditions
Workers often have little motive to improve production
Often set prices well below those that would be established in a market system
Command economies face shortages
Self-interested behavior is behind two features of a market economy
private property rights
Market
are the rights of individuals and groups to own businesses and resources
Private Property rights
is any place where people buy and sell goods and services
The Market
is vital to any single sale or exchange
Clear Ownership
are necessary to make markets work properly
Private Property Rights
The principle that the government should not interfere in the economy is called
Laissez faire
The concept of laissez faire is often paired with
Capitalism
is an economic system that is based on private ownership of the factors of production
Capitalism
the foundation of market economies, operates on the belief that, on their own, producers will create the goods and services that consumers demand
Capitalism
is a market economy in its pure form.
Laissez faire capitalism
A ______ is a trade in which both traders believe that what they are getting is worth more than what they are giving up
voluntary exchange
guides voluntary exchanges
Self-interest
is considered a financial gain from a business transaction
Profit
is the effort of two or more people, acting independently, to get the business of others by offering the best deal.
Competition
is the idea that because consumers are free to purchase what they want and refuse products they do not, they have the ultimate control over what is produced
Consumer sovereignty
_____ acts as a control on self-interest behavior, guiding the market toward a balance between higher value and lower prices
Competition
____ is a situation in which people concentrate their efforts in the areas in which they have an advantage
Specialization
removes the need for households to be self-sufficient, and markets allow households to trade for what they need
Specialization
then, leads to higher- quality yet lower- priced products
Specialization
The _____ is a tool that economists use to understand how market economies operate
circular flow model
The model represents the two key economic decisions makers in market economy
Households
Businesses
The_____is for goods and services is called the product market
Market
The_____isn’t a place as much as it is set activities
Product Market
The____of the product market are business
Suppliers
The_____is the market for the factors of production
Factor Market
_____ own all the factors of production
Individuals
In the factory market, _________ are the Consumers and _______ are the producers
Businesses
Individuals
