Command Economy
Market Economy
Mixed Economy
Seven Goals of an Economy
Vocabulary
100
State
Who owns resources?
100
This is an example of a market economy
What is the United States
100
These are examples of mixed economies
What is Iceland (57%) Sweden (52%) France (52.8%) United Kingdom 47.3% United States 38.9 Russia 34.1 China – 20% of GDP Hong Kong 18.6%
100
Corporations
What is A legal entity, owned by individual stockholders, each of whom has limited liability for the firm’s debts
200
Many health and public services are available to everyone at little or no cost, regardless of income
What is an advantage
200
People and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM
What is market economy
200
ž Combination of both a market and a command economy ž People can carry out many economic decisions and the government intervenes when needed
What is mixed market
200
• Use scarce resources well and not wasteful
What is Economic Efficiency
200
Partnership
What is A business organization owned by two or more persons who agree on a specific division of responsibilities and profits
300
Does not meet the wants and needs of consumers ž Lacks effective incentives to get people to work ž Requires large bureaucracy, which consumes resources ž Has little flexibility to deal with small, day- to-day changes ž New and different ideas discouraged, no room for individuality
What is a disadvantage
300
ž Able to adjust to change gradually ž Individual freedom for everyone ž Lack of government interference ž Decentralized decision making ž Incredible variety of goods and services ž High degree of consumer satisfaction
What is an advantage of market economy
300
One main characteristic of a mixed economy is the ownership of goods by both private and government/state-owned entities. Monopolies have the potential to occur in this type of economy, but the government closely monitors this. For the economy to be mixed, the government can control some parts, but not all. For example, the government may control health care and/or welfare in some mixed economy countries.
What is a characteristic of mixed economy
300
• Equal pay for equal work • People are fair in both their purchases and sales
What is Economic Equity
300
A market structure in which a large number of firms all produce the same product and no single seller controls supply or price
What is pure competition
400
Former Soviet Union North Koren Cuba
What is an example of command economy
400
ž Rewards only productive resources; does not provide for people too young, too old, or too sick to work ž Workers and business face uncertainty as a result of competition and change ž Does not produce enough public goods such as defense, universal education, or health care ž Must guard against market failures
What is a disadvantage of market economy
400
Most business and industry can be left to private firms. Private firms tend to be more efficient than government controlled firms because they have a profit incentive to cut costs and be innovative.
What is an advantage of mixed market
400
Provide as many jobs as possible
What is Full Employment
400
Sole proprietorship
What is A business owned and managed by a single individual
500
Command economy
What is A central authority (usually government) makes most of the WHAT, HOW, and FOR WHOM decisions
500
Consumers decide if they want the good or not
For whom
500
Can be difficult to know how much governments should intervene, e.g. discretionary fiscal policy may create alternative problems such as government borrowing.
What is a disadvantage of mixed market
500
Price don't go up or down too much, too often
What is Price Stability
500
Monopolistic competition
What is A market structure in which many companies sell products that are similar but not identical
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