Podcast
Questions and Answers
What is a characteristic of a command economy?
What is a characteristic of a command economy?
In a free enterprise system, what primarily drives resource allocation?
In a free enterprise system, what primarily drives resource allocation?
Which of the following is an example of government intervention in a mixed economy?
Which of the following is an example of government intervention in a mixed economy?
Why does the government impose a price ceiling?
Why does the government impose a price ceiling?
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What is a primary purpose of imposing taxes on demerit goods?
What is a primary purpose of imposing taxes on demerit goods?
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What role does self-interest play in a free enterprise economy?
What role does self-interest play in a free enterprise economy?
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What is one function of government intervention in the market for essential services?
What is one function of government intervention in the market for essential services?
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Which of the following reflects a negative aspect of unchecked capitalism?
Which of the following reflects a negative aspect of unchecked capitalism?
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What is the primary purpose of implementing a minimum unit price (MUP) for alcohol?
What is the primary purpose of implementing a minimum unit price (MUP) for alcohol?
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What happens when a price ceiling is set below the equilibrium price?
What happens when a price ceiling is set below the equilibrium price?
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How is a price floor defined in economic terms?
How is a price floor defined in economic terms?
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What is a likely consequence of implementing a price floor in a market?
What is a likely consequence of implementing a price floor in a market?
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Which government body is responsible for ensuring the safety and hygiene of food and services?
Which government body is responsible for ensuring the safety and hygiene of food and services?
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What economic effect does raising the minimum price per gram of alcohol aim to achieve?
What economic effect does raising the minimum price per gram of alcohol aim to achieve?
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Which of the following is not a goal of price regulation?
Which of the following is not a goal of price regulation?
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If a government sets a price floor at €30 when the equilibrium price is €20, what is a likely market condition?
If a government sets a price floor at €30 when the equilibrium price is €20, what is a likely market condition?
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What role does a regulator play in economic activity?
What role does a regulator play in economic activity?
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Which scenario would most likely occur if suppliers are unable to sell their product above a price ceiling?
Which scenario would most likely occur if suppliers are unable to sell their product above a price ceiling?
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What is the primary goal of the sugar-sweetened drinks tax?
What is the primary goal of the sugar-sweetened drinks tax?
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What is a significant consequence of the carbon tax for businesses?
What is a significant consequence of the carbon tax for businesses?
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Which of the following describes the purpose of the Plastic Bag Levy implemented in Ireland?
Which of the following describes the purpose of the Plastic Bag Levy implemented in Ireland?
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How does the Minimum Unit Pricing (MUP) of alcohol aim to impact consumer behavior?
How does the Minimum Unit Pricing (MUP) of alcohol aim to impact consumer behavior?
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What is one expected outcome of implementing a carbon tax?
What is one expected outcome of implementing a carbon tax?
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Which measure aims to reduce health system costs associated with excessive alcohol consumption?
Which measure aims to reduce health system costs associated with excessive alcohol consumption?
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What impact does a high carbon tax have on consumers?
What impact does a high carbon tax have on consumers?
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What effect does a decrease in sugary drink consumption have on public health?
What effect does a decrease in sugary drink consumption have on public health?
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How does the cap-and-trade system function?
How does the cap-and-trade system function?
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Which of the following is a potential economic shift resulting from an increased carbon tax?
Which of the following is a potential economic shift resulting from an increased carbon tax?
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What is the main purpose of taxing tobacco and alcohol through VAT and excise duty?
What is the main purpose of taxing tobacco and alcohol through VAT and excise duty?
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What is a potential concern related to high carbon taxes affecting industries?
What is a potential concern related to high carbon taxes affecting industries?
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What was one initial effect of the Plastic Bag Levy in Ireland?
What was one initial effect of the Plastic Bag Levy in Ireland?
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What incentive does a reduced VAT rate for the hospitality sector offer to firms?
What incentive does a reduced VAT rate for the hospitality sector offer to firms?
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What main factor contributes to the decision to implement the Minimum Unit Pricing policy for alcohol?
What main factor contributes to the decision to implement the Minimum Unit Pricing policy for alcohol?
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Study Notes
Economic Systems
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Command Economy (Centrally Planned): Almost all factors of production are owned by the state. Maximum government intervention; the government controls all economic activity. Decision-making is centralized (state decides production and resource allocation). Individuals work for the common good.
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Free Enterprise (Capitalist): Almost all factors of production are privately owned. Minimal government intervention (e.g., providing public goods, national security, and legislation). Private individuals/firms decide production; resources allocated via the price mechanism. Self-interest is key (utility maximization for consumers, profit maximization for firms).
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Mixed Economy: Government plays a crucial role in a mixed economy. It provides essential services (education, healthcare) that private firms might not. State-owned firms also often provide necessary services.
Role of Government in a Mixed Economy
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Essential Services: Provides fundamental necessities that private firms may not provide or might not be profitable to provide e.g. education, healthcare, national train services.
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Regulation: Sets rules and regulations to ensure fair competition, protect consumers, and prevent monopolies. This includes labor standards, environmental protection, and business practices. Regulation prevents unchecked negative effects of capitalism (exploitation, environmental degradation).
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Market Intervention: Government intervention in specific markets sometimes occurs e.g. tax on fossil fuels, subsidies for electric vehicles.
Why Government Intervenes in Markets
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Demerit Goods: Discourages the consumption/production of goods with negative effects on consumers and third parties (e.g., through taxes on alcohol, tobacco).
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Fair Prices: Sets price ceilings (preventing excessively high prices) or price floors (guaranteeing minimum prices to suppliers).
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Encouraging Production: Provides incentives (e.g., Help to Buy scheme) to stimulate desired economic activity (e.g., residential housing development).
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Redistributing Income: Lessens inequality through taxation and welfare programs.
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Economic Stabilization: Manages inflation, unemployment, and economic growth through fiscal and monetary policies.
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Consumer/Worker Protection: Ensures safety, fairness, and rights via regulations and laws.
Taxation
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Incentivizing Activity: Levies influence economic decisions (e.g., low corporation tax attracts foreign direct investment; high DIRT encourages spending).
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Influencing Behavior: Taxes can discourage undesirable behaviors (e.g., taxes on tobacco, alcohol, sugar-sweetened drinks). Adjustments also influence spending e.g. VAT reduction in hospitality.
Examples of Government Intervention
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Sugary Drinks Tax (2018): Reduces consumption of sugary drinks, particularly for children; encourages healthier choices (water); funds health initiatives.
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Minimum Unit Pricing of Alcohol: Addresses excessive alcohol consumption by linking the minimum price to alcohol units in off-licences. (Excludes pubs, restaurants).
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Carbon Tax/Cap-and-Trade/Regulations: Aims at reducing carbon emissions. Incentives to cleaner technologies.
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Plastic Bag Levy: Significantly reduced plastic bag use. Encouraged reusable bags, improved environmental cleanliness.
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Minimum Unit Pricing on Alcohol (2022): Aims to curb alcohol consumption among heavy drinkers by increasing price of cheaper, high-alcohol-content drinks.
Price Ceilings and Price Floors
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Price Ceiling: Sets a maximum price below equilibrium; creates excess demand (shortage).
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Price Floor: Sets a minimum price above equilibrium; creates excess supply (surplus); government may need to buy surplus.
Regulation
- Ensuring Fair Conditions: Regulators (e.g., CCPC) promote fair competition and avoid consumer exploitation; Health and Safety or environmental authorities enforce relevant standards.
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Description
Dive into the three main types of economic systems: Command Economy, Free Enterprise, and Mixed Economy. This quiz covers key characteristics, government roles, and decision-making processes within these systems, focusing on how they affect production and resource allocation. Test your understanding of how economies operate and their impact on society.
