Basic Economic Systems
Who owns the FOP in a free market?
Private Individuals
We watched videos on 3 communist countries. Which countries were they?
Cuba, North Korea, USSR
Define Profit
The money that’s left over after the costs of producing a good or service have been subtracted from the revenue gained by selling the good or service.
The Free Enterprise System is also commonly called what?
Capitalism
What are the FOP?
Land
Labor
Capital
Entrepreneurship
What are the 3 basic economic systems we identified?
Traditional Economic Systems
Planned Economic Systems
Market-based Economic Systems
Modern Planned Economies have largely been designed by whose ideas?
Karl Marx
How do consumers vote?
With their wallets
What's the best example of a Free Enterprise System?
America
What are the inputs in the Factor Market?
Factors of Production
In this form of Market, deviation from the norm is generally not possible.
Traditional market
What is the political system that rejects democracy and limits political diversity. It relies on a strong central power to maintain the existing power structure and often undermines the rule of law, the separation of powers, and democratic voting practices.
Authoritarianism
A Free enterprise system with some level of government involvement can be called what?
Modified Free Enterprise System
Why is the Free Enterprise called a Free Enterprise?
This form of economic system anyone is free to start a business or enterprise.
The inner circle of the Circular Flow follows the flow of ______ while the outer circle follows the flow of _______.
Capital (Factors of Production)
Monetary Flow (Financial)
A planned economy is also called what type of economy?
Command Economy
What is the economic difference between socialism and communism?
Factors of production ownership. Government controls some, but not all in socialism. In communism, it controls all.
How do producers determine price?
They try to finding the highest price to sell good/services that consumers are willing to pay for the good.
What do we called a country that is transitioning into a free enterprise system from a more command market?
Emerging Markets
What is the name of the area in the circular flow where goods and services are exchanged?
Product Market
Who is seen as the Father of modern Market Economics?
Adams Smith
We identified 7 disadvantages to a Planned Economy. Try and identify as many as you can.
Frequent misguided decisions
Little motivation for increased productivity
Brain Drain
Shortages
Strict command and suffering that occurs
High levels of corruption
Lack of innovation and competition
What is the concept that the author of the Wealth of Nations identified that said the individual choices of consumers and producers is what will drive the market.
The Invisible Hand
There were 3 Keys to the Free Enterprise System. What are they?
1. Free Exchange
2. Legal Equality
3. Free Contract
Draw a Circular Flow (best depiction wins the points).
Winner