Questions and Answers
What is an economic system?
The method used by a society to produce and distribute goods and services.
What are factor payments?
The income people receive for supplying factors of production, such as land, labor, or capital.
Which of the following is not a key economic question?
How does each society determine who will consume what is produced?
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What is the standard of living?
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Which of the following is a condition that most people would not expect the safety net of the government to provide for?
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What is a traditional economy?
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What is a market economy?
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What is the function of an economic system?
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How does a society answer the three economic questions about production and consumption?
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Pure market economies always base economic decisions on what?
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In which kind of economy would an entrepreneur with an innovative idea have the most opportunity to try to achieve success?
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In which economy do communities generally have a low standard of living?
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What is a mixed economy?
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What is a centrally planned economy?
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To improve the standard of living, an economy must:
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What is specialization?
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Which occupation is not an example of specialization?
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What is a household?
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What is a business/firm?
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What is a factor market?
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What is profit?
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What is a product market?
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Which of the following does not own factors of production?
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What does the circular flow model show?
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Which of the following is not an advantage of a free market economy?
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Why do markets exist?
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Which of the following is Adam Smith not known for?
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What is the struggle among producers for consumer dollars called?
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What is a market?
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Study Notes
Economic Systems
- Economic System: The method used by societies to produce and distribute goods and services.
- Traditional Economy: Relies on habits, customs, or rituals for production and consumption.
- Market Economy: Economic decisions are made by individuals through exchange or trade.
- Mixed Economy: Combines a market-based system with some government intervention.
- Centrally Planned Economy: Government regulates production of goods and services.
Economic Questions and Goals
- Key Economic Questions: Involves how to produce, what to produce, and for whom to produce.
- Societal Values: The approach to these questions depends on the values and importance attached by a society.
- Function of an Economic System: Focus on producing and distributing goods and services.
Factors of Production
- Factor Payments: Income received for supplying factors of production such as land, labor, or capital.
- Factor Market: Exchange arena where firms purchase production factors from households.
- Specialization: Concentration of productive efforts on limited activities contributes to efficiency.
Standard of Living and Safety Nets
- Standard of Living: Reflects the level of economic prosperity within a society.
- Safety Nets: Government assistance expected for low income but not necessarily for non-essential circumstances.
Business and Employment
- Business/Firm: Organization using resources to produce and sell products.
- Household: A person or group living together which provides labor or resources.
Economic Interaction Models
- Circular Flow Model: Illustrates interactions between households and businesses in a free market.
Markets and Competition
- Market: Arrangement allowing buyers and sellers to exchange goods and services.
- Product Market: Where households purchase goods and services produced by firms.
- Factor Market: Where firms acquire factors of production from households.
- Competition: The struggle among producers for consumer dollars enhances product offerings.
Innovation and Growth
- Growth Through Innovation: Improving standard of living requires economic growth and innovation.
- Entrepreneurs: Are most likely to succeed in a market economy where opportunities abound.
Other Key Concepts
- Profit: The financial gain made in a transaction.
- Economic Equity: Not considered an advantage of a free market economy.
- Reasons for Market Existence: Facilitate buying needs and selling produced goods and services.
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Description
Explore the various economic systems employed by societies to produce and distribute goods and services. This quiz covers traditional, market, mixed, and centrally planned economies, along with the fundamental economic questions and the factors of production. Test your understanding of how economic systems impact societal values and decision-making.
