Week 2 Flashcards
What is the Market System also known as?
The Free Enterprise System
It refers to an economic system where privately owned businesses produce goods and services for profit.
What are the two main sectors in the Canadian Market System?
- Private Sector
- Government Sector
What role do consumers play in the Market System?
Consumers play the largest role in determining what to produce through their purchasing decisions.
What is a market?
A place where buyers and sellers come together to exchange goods and services for money.
What is the Demand Side of the Market?
Buyers competing to purchase products.
What is the Supply Side of the Market?
Sellers competing to make sales.
What percentage of economic output does the Government Sector account for in Canada?
20%
What are the three Economic Questions answered by the Market System?
- What to Produce?
- How to Produce It?
- How to Divide the Economic Pie?
What are ‘Price Signals’?
Price changes that link buyers and sellers through increases or decreases in demand.
How does competition affect the Market System?
Competition promotes effectiveness, efficiency, and the cheapest price to the customer.
What is the Profit Motive?
The drive to increase profits by effectively and efficiently using economic resources.
What can profits be used for?
- Reinvestment
- Paid as dividends to shareholders
What are the roles of profits in the market system?
- Motivate effective use of resources
- Increase productivity
- Improve standard of living
What is a Monopoly?
A market structure where producers band together to limit competition, resulting in higher prices and profits.
What is Canada’s economic system primarily described as?
A mixed free enterprise system.
What are the three major roles of government in the economy?
- Major providers of public services
- Regulate business operations
- Redistribution of income
Fill in the blank: The Government Sector produces ___% of economic output.
20%
True or False: The Command System is the opposite of the Market System.
True
What are some problems in the Private Sector?
- Health Care
- Education
What does government intervention aim to address?
Market power and its byproducts.
What is one effect of high demand on wages?
Higher wage.
What is the definition of ‘efficiency’ in production?
Producing goods at the lowest possible cost.
What is a significant downside of the Command System?
Lack of efficiency and effectiveness.
What are the economic benefits of subsidies?
They can support essential services and improve accessibility.
