week 2

Question 1

what is capitalism

Answer 1

Capitalism is an economic system in which the major production and distribution is privately owned, operating under a market system

Question 2

what is socialism

Answer 2

Socialism is an economic system characterized by public ownership of property and a planned economy

Question 3

what is the central virtue of markets

Answer 3

Central virtue of markets: they allow people to organize productive activities in socially efficienct ways using far less information than any other type of economic institute

Question 4

what did joseph heath quote say about an efficient economy

Answer 4

“A society works efficiently when it produces the right sort of stuff, delivers it in the right place at the right time, allowing people to satisfy their particular needs and desires”

Question 5

what is said about markets and organization

Answer 5

“Markets make it possible to collect information and coordinate interactions in a way that is truly effortless” compared to other ways of organizing this decision making

Question 6

what are negative externalities

Answer 6

Negative externalities are costs imposed on third parties (not buyer or seller) without compensation

Question 7

what are positive externalities?

Answer 7

Positive externalities are benefits enjoyed by third parties as a result of na economic transactions

Question 8

what are public goods?

Answer 8

Public goods are goods that people consume together, and where one person’s consumption doesn’t limit anothers