Through factor payments, including profits, societies can determine who will be the consumers of the goods and services produced. Firm: an organization that uses resources to produce a product or service, which it then sells factor market: the arena of exchange in which firms purchase the factors of production from households product market: the arena of exchange in which households purchase goods and services from firms self-interest: an individual's own personal gain. Basic economic concepts answer key. Slide 35 Copyright © Pearson Education, apter 2 Section 1 Objectives scribe how a centrally planned economy is organized. Slide 44 Copyright © Pearson Education, apter 2 Section 1 Disadvantages Nations with command economies often have trouble meeting the basic economic goals. The government owns all the property and output equipment. Slide 15 Copyright © Pearson Education, apter 2 Section 1 Traditional Economies The oldest and simplest economic system is known as a traditional economy. Analyze the societal values that determine how a country answers the three economic questions.
18. worries a lot 12 3 Assumes the best about people 5 5 is fascinated by art music. Chapter 2 economic systems answer key figures. The child cannot feel pain and can suffer injuries without even knowing it. Because resources are limited, each decision that a society makes about what to produce comes at an opportunity cost. Slide 41 Copyright © Pearson Education, apter 2 Section 1 Communism –Under communism, the central government owns and controls all resources and means of production. Specialization allows businesses to focus on a limited number of related products or services. Despite the advantages of a free market economy, no country today operates under a pure, unregulated free market.
Click to see the original works with their full license. Course Hero member to access this document. Slide 14 Copyright © Pearson Education, apter 2 Section 1 Economic Growth A society also strives for economic growth. Slide 23 Copyright © Pearson Education, apter 2 Section 1 The Purpose of Markets Checkpoint: Why do markets exist? Chapter 2 economic systems answer key of life. Scribe the role of free enterprise in the United States economy. Slide 51 Copyright © Pearson Education, apter 2 Section 1 The Rise of Free Markets, cont. In the United States, Americans face some limitations but, in general, we enjoy a large amount of economic freedom.
C. The child lacks the ability to react to a dangerous situation. Mpare the mixed economies of various nations along a continuum between centrally planned and free market systems. Slide 58 Copyright © Pearson Education, apter 2 Section 1 American Economic Freedom The United States enjoys a high level of economic freedom. The inevitable cost of capitalism according to Marx was the exploitation of workers and an unfair distribution of wealth. If a child suffers from congenital analgesia, why must he or she be careful when outside playing?
All societies must prioritize their economic goals, or arrange them in order of importance. In a free market system, individuals and privately owned businesses own the factors of production. Each choice comes with some kind of trade-off. Slide 47 Copyright © Pearson Education, apter 2 Section 1 Key Terms laissez faire: the doctrine that government generally should not intervene in the marketplace private property: property that is owned by individuals or companies, not by the government or people as a whole mixed economy: a market-based economic system in which the government is involved to some extent. Foreign investment and free trade is encouraged –The banking industry operates under relatively few restrictions –Foreign-owned banks have few additional restrictions. In a mixed economy, the market is free but has a certain degree of government control. Entify the disadvantages of a centrally planned economy. Traditional economies are usually found in communities that tend to stay small and close. Because of competition among other firms, however, increasing sales is not always possible. Use your answer to explain why thermonuclear weapons require regular maintenance. Because of specialization, markets are needed to give people an arena with which to sell their products and to buy products that they don't produce themselves but need. Economic Equity: The situation in an economy in which the apportionment of resources or goods among the people is considered fair. Amutationofaglutamicacidresiduetoalysineinanenzymeinthecellwillmostlikelydisrupt. Communism derived from the writings of Karl Marx who believed that labor was the source of all value but that under capitalism, all the profit created by laborers ended up in the hands of the property owners.
Self-Interest and Competition are absent However, command economies do guarantee jobs and income and can be used to jump-start selected industries. Each society must decide how to divide its economic pie. Slide 38 Copyright © Pearson Education, apter 2 Section 1 How Central Planning Works –In a centrally planned economy (also known as a command economy), the government, rather than individual producers and consumers, answer the key economic questions. Slide 36 Copyright © Pearson Education, apter 2 Section 1 Key Terms centrally planned economy: an economic system in which the government makes all decisions on the three key economic questions command economy: another name for a centrally planned economy socialism: a range of economic and political systems based on the belief that wealth should be distributed evenly throughout society.
Upload your study docs or become a. A free market economy is characterized by: Self-interest Competition Economic freedom, efficiency, and equity. In many cases, these communities lack modern conveniences and have a relatively low standard of living. In Hong Kong, the private sector rules. Slide 56 Copyright © Pearson Education, apter 2 Section 1 The United States The United States is a mixed economy whose foundation is the free market. Students also viewed. Economic systems also strive to achieve a certain degree of economic security. As a society decides how to produce its goods and services, it must consider how best to use its land, labor, and capital. Slide 24 Copyright © Pearson Education, apter 2 Section 1 Specialization Rather than being self-sufficient, each of us specializes in a few products or services.
A society's values, such as freedom or tradition, guide the type of economic system that society will have. The Government discouraged competition by determining prices, wages, and products. Slide 12 Copyright © Pearson Education, apter 2 Section 1 Economic Freedom and Security Some societies limit the economic freedoms of its people. Innovation plays a huge role in economic success as well. The government protects private property and rarely interferes in the free market, aside from establishing wage and price controls on rent and some public services. The marketplace operates with a limited degree of government regulation. Economic transition: a period of change in which a nation moves from one economic system to another privatization: the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace free enterprise system: an economic system in which investments in firms are made in a free market by private decision rather than by state control. Each society is guided by its economic system, which affects the way in which it does business within the society itself and with other societies. Thermonuclear weapons use tritium for their nuclear reactions.
Shortages were a recurring problem in the Soviet Union. Slide 55 Copyright © Pearson Education, apter 2 Section 1 Hong Kong Hong Kong represents one of the world's freest markets. Standard of living: level of economic prosperity innovation: the process of bringing new methods, products, or ideas into use traditional economy: an economic system that relies on habit, custom, or ritual to decide the three key economic questions. The complex bureaucracy of a command economy is not efficiently run and does not adjust quickly to market changes. Consumers pursuing their self-interest have the incentive to look for lower prices. How should goods and services be produced? Slide 2 Copyright © Pearson Education, apter 2 Section 1 Objectives entify the three key economic questions that all societies must answer. Specialization leads to efficient use of land, labor, and capital. Recommended textbook solutions. Innovation is not rewarded and thus economic growth is stilted. There is minimal, if any, economic freedom. Entify the advantages of a free market economy. How a society answers these three questions defines the type of economic system that society has. The government owns both land and capital.
Terpret a circular flow model of a mixed economy. Flickr Creative Commons Images. A nation's economy must grow so it can provide jobs for the new people joining the workforce. Slide 5 Copyright © Pearson Education, apter 2 Section 1 Introduction What goals and values affect how a society answers the key economic questions? North Korea's economy is almost totally dominated by the government. Incentive: the hope of reward or fear of penalty that encourages a person to behave a certain way competition: the struggle among producers for the dollars of consumers invisible hand: a term coined by Adam Smith to describe the self-regulating nature of the marketplace consumer sovereignty: the powers of consumers to decide what gets produced.
This preview shows page 1 out of 1 page. Why is China a little bit farther to the right on the diagram below than Cuba? Slide 57 Copyright © Pearson Education, apter 2 Section 1 Government Intervention The American government intervenes in the economy by: –Keeping order –Providing vital services –Promoting general welfare Federal and state laws protect private property. Slide 25 Copyright © Pearson Education, apter 2 Section 1 Free Market Economy In a free market, answers to the three key economic questions are made by voluntary exchange in the marketplace. They have a large degree of economic freedom.
Slide 52 Copyright © Pearson Education, apter 2 Section 1 Circular Flow Model of a Mixed Economy. It is characterized as a free enterprise system. Scribe the self-regulating nature of the marketplace. Consumers would often wait in long lines at stores, only to discover that there was nothing to buy.