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Questions and Answers
What is an economic system?
What is an economic system?
A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem.
What determines what goods are produced, how they're produced, who gets them, how to accommodate change, and how to promote technological progress?
What determines what goods are produced, how they're produced, who gets them, how to accommodate change, and how to promote technological progress?
economic system
How do economic systems differ?
How do economic systems differ?
1 - who owns the factors of production; 2 - the method used to motivate, coordinate, and direct economic activity.
What is laissez-faire capitalism?
What is laissez-faire capitalism?
What is a command system?
What is a command system?
What is consumer sovereignty?
What is consumer sovereignty?
What are dollar votes?
What are dollar votes?
What does the 'invisible hand' refer to?
What does the 'invisible hand' refer to?
What does a circular flow diagram illustrate?
What does a circular flow diagram illustrate?
Who are residual claimants?
Who are residual claimants?
____ is a particular set of institutional arrangements and a coordinating mechanism that responds to the economizing problem.
____ is a particular set of institutional arrangements and a coordinating mechanism that responds to the economizing problem.
An economic system tends to address ______ goods and services are to be produced, ________ they are to be produced, _________ gets the goods.
An economic system tends to address ______ goods and services are to be produced, ________ they are to be produced, _________ gets the goods.
What does the term 'laissez-faire' refer to?
What does the term 'laissez-faire' refer to?
Which of the following describe a command system? (Select all that apply)
Which of the following describe a command system? (Select all that apply)
What is the command system also known as? (Select all that apply)
What is the command system also known as? (Select all that apply)
Which of the following is true of a market system?
Which of the following is true of a market system?
Which of the following is characterized by the private ownership of resources?
Which of the following is characterized by the private ownership of resources?
The three main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market.
The three main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market.
What has to determine what goods are produced, how they are produced, who gets them, how to accommodate change, and how to promote technological progress?
What has to determine what goods are produced, how they are produced, who gets them, how to accommodate change, and how to promote technological progress?
____ ownership of capital gives capitalism its name.
____ ownership of capital gives capitalism its name.
What is referred to when economic units try to achieve their own goals while delivering value to others?
What is referred to when economic units try to achieve their own goals while delivering value to others?
Which of the following does competition require? (Select all that apply)
Which of the following does competition require? (Select all that apply)
What is the coordinating mechanism in a market system?
What is the coordinating mechanism in a market system?
A ________ is an institution or mechanism that brings buyers and sellers into contact.
A ________ is an institution or mechanism that brings buyers and sellers into contact.
The goods and services produced by an economic unit through ____ can be exchanged for a full range of desired products by other economic units.
The goods and services produced by an economic unit through ____ can be exchanged for a full range of desired products by other economic units.
_____ is the human specialization of some process.
_____ is the human specialization of some process.
Money complicates the exchange of trade.
Money complicates the exchange of trade.
Which of the following best illustrates exchange through barter?
Which of the following best illustrates exchange through barter?
An active, but limited government is characteristic of which market system in modern advanced economies?
An active, but limited government is characteristic of which market system in modern advanced economies?
In the type of capitalism practiced in the US and most other countries, the government plays ____ role in the economy.
In the type of capitalism practiced in the US and most other countries, the government plays ____ role in the economy.
Why are advanced technology and capital goods important? (Select all that apply)
Why are advanced technology and capital goods important? (Select all that apply)
In order to serve as money, an item must be generally acceptable to ____ in exchange for their goods and services.
In order to serve as money, an item must be generally acceptable to ____ in exchange for their goods and services.
The title to an automobile or the deed to a cattle ranch assures a buyer that the seller is the legitimate owner of that property. This is an example of property rights _____.
The title to an automobile or the deed to a cattle ranch assures a buyer that the seller is the legitimate owner of that property. This is an example of property rights _____.
Product and resource prices in a market system are determined by:
Product and resource prices in a market system are determined by:
In the market system, competition, freedom of choice, self-interest, and personal ____ provide the opportunity and motivation for technological advance.
In the market system, competition, freedom of choice, self-interest, and personal ____ provide the opportunity and motivation for technological advance.
The interaction between buyers and sellers in a market system determines ____ and ____.
The interaction between buyers and sellers in a market system determines ____ and ____.
Study Notes
Economic Systems
- Economic systems provide a framework for addressing the economizing problem, determining production, and resource allocation.
- They differ primarily in ownership of production factors and methods for coordinating economic activities.
Laissez-Faire Capitalism
- Known as pure capitalism, it limits government intervention, allowing markets to function on voluntary transactions.
- The government’s role is restricted to protecting property rights and ensuring legal frameworks for market operations.
Command System
- Characterized by public ownership of resources, with government central planning directing economic activity.
- Commonly associated with socialism and communism.
Consumer Sovereignty
- Consumers dictate what goods and services are produced through their purchasing choices, exerting influence through "dollar votes."
Invisible Hand
- Describes how competition can lead to beneficial outcomes for society, even when individual firms are motivated by self-interest.
Circular Flow Diagram
- Illustrates the movement of resources and products between households and firms, alongside the corresponding flow of money.
Residual Claimants
- In a market system, these agents are entitled to profits or losses after all other inputs have been compensated, typically the firm owners.
Competition
- Requires multiple independent buyers and sellers in a market, along with freedom for them to enter or exit the market.
Market System Characteristics
- Defined by private ownership of resources and market coordination of economic activities.
- Market prices are established through the interaction between buyers and sellers.
Specialization and Division of Labor
- Specialization allows economic units to produce specific goods, facilitating exchange with others.
- Division of labor enhances productivity by allocating specific tasks to individuals or groups.
Money as a Facilitator
- Contrary to complicating trade, money simplifies exchanges by serving as a universally accepted medium.
Government's Role in Economic Systems
- In the US and many advanced economies, the government plays a substantial role within a free market system, actively overseeing and intervening when necessary.
Technological Advancement
- Advanced technology and capital goods can enhance worker productivity, though the most efficient production methods may not always seem direct.
Property Rights and Exchanges
- Ownership titles, like those for an automobile or real estate, ensure legitimate ownership, facilitating smooth exchanges and economic growth.
Market Prices Determination
- Prices in a market system arise from the dynamic interaction between buyers and sellers, not dictated solely by government or sellers.
Motivation for Technological Advances
- Key motivations like freedom, self-interest, and the potential for rewards are essential for fostering innovation and advancements in technology.
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Description
Test your understanding of key terms and concepts from Chapter 2 of Econ 150. This quiz covers various definitions and characteristics of economic systems, addressing how they organize production and distribution in an economy. Perfect for review before exams!
