Topic 2 ~ Free Enterprise & Other Econ. Systems

Question 1

Economic Systems

Answer 1

Method used by a society to PRODUCE & DISTRIBUTE goods/services

Question 2

Traditional Economy

Answer 2

Based around tradition - social roles are determined by prev. generations

PROS - Everyone has distinct roles, life = predictable & stable, centered on community/family

CONS - Slowly adapt to new ideas/tech, everyone has distinct roles, life = predictable & stable

Question 3

Market Economy

Answer 3

3 Basic Qs ANSWER
People & Biz act with self-interest in mind

Examples
USA, Hong Kong, Singapore

“Market”
Economic arrangement
BUYERS & SELLERS exchange goods/services

Exist because…
NO ONE person can produce every/all goods/services that consumers need to feel satisfied

Households & Biz
Exchange $ and products with e/o

Self-regulation
Self-interested = motivating force
BUYERS & SELLERS are self-oriented
Competition = regulating force

Question 4

Invisible Hand

Answer 4

“Self-regulation” part of Free Market Econ.

Market Econs (tho self-regulated) does NOT have a central plan
“ACTION based” (buyers & sellers)

Prices ⬆️ when LOTS of g/s are bought… Prices ⬇️ when NOTHING is bought