Economic Systems Overview

A command economy is one where the government owns almost all factors of production and centrally controls economic activity, unlike a free enterprise system where factors are privately owned and decisions are made by individuals and firms.

In a mixed economy, the government provides essential services that private firms may not, regulates markets to ensure fair competition, and intervenes in certain markets through taxation and subsidies.

A demerit good is one that can negatively affect consumers and society; government intervention, such as taxes or regulations, aims to discourage its consumption and minimize negative externalities.

<p>The government can introduce price ceilings to prevent prices from rising too high, thereby making goods more affordable for consumers.</p> Signup and view all the answers

<p>In a free enterprise system, individuals and firms are motivated by self-interest, with consumers aiming for utility maximization and firms striving for profit maximization.</p> Signup and view all the answers

<p>The government provides subsidies to encourage the production and consumption of certain goods and services, promoting environmental sustainability and innovation.</p> Signup and view all the answers

<p>Unchecked capitalism can lead to exploitation, environmental degradation, and the formation of monopolies, prompting the need for government regulation.</p> Signup and view all the answers

<p>The government can establish price floors to ensure suppliers receive a minimum price for their goods or services, protecting their financial viability.</p> Signup and view all the answers

<p>To reduce the consumption of sugary drinks and encourage healthier choices among consumers.</p> Signup and view all the answers

<p>It links the price of alcoholic drinks to the number of units of alcohol, thus increasing prices for higher alcohol content drinks.</p> Signup and view all the answers

<p>It raises operating costs for fossil fuel-dependent companies and encourages them to adopt cleaner technologies.</p> Signup and view all the answers

<p>It led to over a 90% reduction in plastic bag usage and promoted sustainable shopping habits.</p> Signup and view all the answers

<p>The revenue can be used to fund environmental projects or subsidize green technologies.</p> Signup and view all the answers

<p>It can shift the economy toward greener industries and boost investments in renewable energy.</p> Signup and view all the answers

<p>It incentivizes individuals to purchase bikes for commuting, reducing traffic congestion.</p> Signup and view all the answers

<p>They include increased costs to the health and justice systems due to excessive alcohol consumption.</p> Signup and view all the answers

<p>By managing inflation, unemployment, and economic growth through targeted interventions.</p> Signup and view all the answers

<p>They discourage the consumption of harmful products like tobacco and alcohol.</p> Signup and view all the answers

<p>It allowed firms to decrease prices, thereby attracting more customers during challenging economic times.</p> Signup and view all the answers

<p>To limit total carbon emissions and create financial incentives for companies to reduce pollution.</p> Signup and view all the answers

<p>To lower obesity rates and improve public health, especially among children.</p> Signup and view all the answers

<p>It could lead to higher prices for energy and goods with high carbon footprints.</p> Signup and view all the answers

<p>High taxes may deter foreign investors from entering the market.</p> Signup and view all the answers

<p>The purpose of MUP is to reduce excessive drinking, particularly among heavy drinkers and young people, by making high-alcohol-content beverages less affordable.</p> Signup and view all the answers

<p>Price floors lead to excess supply because they set a price above the equilibrium, resulting in suppliers providing more units than consumers are willing to buy.</p> Signup and view all the answers

<p>Setting a price ceiling below the equilibrium price creates excess demand, as more consumers want the product at the lower price, while suppliers provide less.</p> Signup and view all the answers

<p>MUP targets cheap, strong drinks to deter excessive consumption that often leads to health issues among vulnerable groups.</p> Signup and view all the answers

<p>A price floor on alcohol raises the cost of inexpensive drinks, which can lead to increased healthcare costs initially, but may reduce overall social costs related to alcohol abuse over time.</p> Signup and view all the answers

<p>Regulation ensures consumers are protected from anti-competitive behavior, while also enforcing safety, hygiene standards, and environmental protection.</p> Signup and view all the answers

<p>According to the Law of Demand, when a price ceiling is imposed and the price decreases, the quantity demanded increases.</p> Signup and view all the answers

<p>Excessive supply due to a price floor can lead to unsold stock, forcing the government to purchase or redistribute the surplus.</p> Signup and view all the answers

<p>The equilibrium price is the price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in no surplus or shortage.</p> Signup and view all the answers

<p>MUP is expected to benefit public health by discouraging excessive drinking, which can reduce alcohol-related health issues and lower healthcare costs.</p> Signup and view all the answers