Free Market
What is Free Market Economics?
An economic system where there is little to no regulation of market forces by governmental bodies
What is a Mixed Economic System
An economic system where governmental bodies have some regulatory power, but the market still has moderate freedom to regulate itself
What is a Command economic system?
An economic system where there is no private ownership of business or industry, and governmental bodies have complete economic control
Who was Adam Smith
Scottish philosopher who came up with and popularized modern economic theories
The ways by which goods and services are produced and distributed
What are common examples of regulation in a Mixed economy
Regulating prices on necessary goods like agriculture goods, mandating minimum standards of working conditions, labor laws, providing funding to socially necessary services like police, fire, emergency services etc.
What are historical examples of command economies?
Soviet Russia, North Korea, Cuba
What is the Law of Supply and Demand
Economic theory that states that the supply of a good or service and the public demand for that good or service determines the price
Give an example of means of production
Infrastructure like factories, land resources like farms, mines, forests. Human labor as well
Why are mixed economic systems the predominant economic system around the world?
What are three negative aspects of command economies
Answers depend
What is the Law of Competition
Competition in an economy will lead to businesses to lower prices or introducing new products
What is the Invisible Hand
A metaphor to explain a self-regulating economy. It states that an economy will regulate itself when producers and consumers will act in their own self interest and any problems in an economy will fix itself
What are two positive and negative effects of Mixed economic systems
Answers vary
What are the theoretical positive aspects of command economies
Answers vary
What is the Law of Self-Interest
Producers and consumers acting in their own economic self interest is beneficial to the economy
What is perfect competition and why is it theoretically impossible to acheive
Perfect competition is when there are no monopolies, all businesses sell the same good for the same price, buyers have complete and perfect information, and there are no barriers to entry into the market.
This is theoretically impossible because no consumers have complete and perfect information, and there are almost always barriers to entry in the market.
Why does regulation in mixed economies sometime take so long to be instituted or take effect?
Regulation in mixed economies is generally always reactive instead of proactive. Generally tragedies crisis have to take place before new regulations are instituted.
Why have command economies almost always but run by authoritarian regimes?
Explain the Brewer, Baker and Butcher example
The Brewer, Baker and Butcher all create their products not for the good of society, but to make money. Them working to make money for themselves is still beneficial to society because they are providing a good/service that consumers find necessary.