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Questions and Answers
What are the main characteristics of a traditional economy?
What are the main characteristics of a traditional economy?
The use of scarce resources is based on ritual, habit, or custom, with defined roles based on customs of elders and ancestors.
What are the five major weaknesses of a command economy?
What are the five major weaknesses of a command economy?
- Ignores basic wants and needs of consumers. 2. Incentivizes quota fulfillment over good product quality. 3. Requires a large decision-making bureaucracy. 4. Bureaucracy lacks flexibility for minor problems. 5. Rarely rewards individual initiative.
Who makes economic decisions in a market economy?
Who makes economic decisions in a market economy?
Economic decisions are made by the people, specifically consumers and businesses through supply and demand.
What are the advantages and disadvantages of a mixed economy?
What are the advantages and disadvantages of a mixed economy?
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How do individuals and businesspeople benefit from economic freedom?
How do individuals and businesspeople benefit from economic freedom?
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Who benefits from economic security?
Who benefits from economic security?
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How does a society resolve conflicts between economic and social goals?
How does a society resolve conflicts between economic and social goals?
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What are the five major characteristics of free enterprise?
What are the five major characteristics of free enterprise?
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Why are entrepreneurs thought to have important roles in the economy?
Why are entrepreneurs thought to have important roles in the economy?
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How have consumers influenced the success of products in recent years?
How have consumers influenced the success of products in recent years?
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What are the five major roles that the government plays in the economy?
What are the five major roles that the government plays in the economy?
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Study Notes
Traditional Economy
- Economic decisions stem from rituals, habits, or customs.
- Individuals have predefined roles based on past traditions rather than personal choices.
Command Economy Weaknesses
- Fails to meet consumer wants and needs.
- Incentivizes quota fulfillment over quality production.
- Relies on a large, inflexible bureaucracy for decision-making.
- Lacks responsiveness to everyday problems.
- Rarely rewards individual initiative.
Market Economy Decision-Making
- Citizens and businesses collaborate to determine production based on supply and demand.
- Economic choices are overwhelmingly influenced by consumer preferences.
Mixed Economy Advantages and Disadvantages
- Advantages: Supports vulnerable groups willing to help those unable to provide for themselves.
- Disadvantages: Leads to increased costs and taxes; suffers from inefficiencies associated with socialism and communism.
Economic Freedom Benefits
- Individuals gain autonomy in selecting jobs, employers, and financial choices.
- Businesspeople enjoy the ability to decide on production methods and market strategies.
Economic Security Beneficiaries
- Laid-off workers utilize state economic security programs.
- Employers often provide insurance for worker-related injuries and illnesses.
- Social Security benefits retired or disabled individuals and their families; Medicare assists the elderly.
Resolving Economic and Social Conflicts
- Obligations of trade-offs between goals assessed by comparing costs and benefits.
- Political choices reflect community preferences regarding conflicts.
Characteristics of Free Enterprise
- Economic Freedom: Choice of purchases, occupations, and employment.
- Voluntary Exchange: Free and willing interaction in market transactions.
- Private Property Rights: Control over personal possessions.
- Profit Motive: Incentive for material improvement through profit.
- Competition: Sellers striving to attract consumers, fostering a dynamic market.
Importance of Entrepreneurs
- Entrepreneurs drive the free enterprise system by managing production factors.
- Their success benefits workers, consumers, and governmental revenue.
- Successful entrepreneurs encourage competition, enhancing product quality and reducing costs.
Consumer Influence on Products
- Shifting consumer preferences have notably impacted product success.
- Rising popularity of video games and search engines indicates changing market demands.
- Increased computer sales outpacing TVs signal new technological preferences.
Government Roles in the Economy
- The primary roles of government in promoting a stable economic environment involve regulation and oversight (specific roles not detailed in provided text).
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Description
Test your knowledge on the characteristics of traditional economies and other key concepts in foreign policy from Chapters 2 and 3 of your economics course. This quiz features flashcards designed to reinforce your understanding of essential economic principles and their applications.
