Command Economy
Name one of the three basic economic questions?
What goods and services should be produced?
How should these goods and services be produced?
Who consumes these goods and services?
Economic growth is measured by:
The increase in a nation’s total output of goods and services over time
A monopoly is a firm that:
Has no competitors and can control market prices
Who were the proletariats according to Karl Marx?
The working-class individuals who sold their labor for wages
Describe specialization
The concentration of resources to only make certain goods and services
What is the role of competition in a market economy?
It encourages businesses to improve product quality, lower prices, and find more efficient ways to produce goods and services to attract customers.
How do investments in human capital contribute to economic growth?
A more skilled and knowledgeable workforce can innovate, adapt to new technologies, and perform tasks more efficiently, increasing output and driving business expansion.
Why is socialism often viewed negatively in America?
Due to the Cold War legacy and the strong emphasis on individualism
Which country staged the first communist revolution, and what name did it change to?
Russia; Soviet Union
Explain why scarcity is a driving force behind economic decision-making?
Scarcity is a fundamental economic problem because resources - such as time, money, labor, and raw materials - are limited, while human wants and needs are virtually unlimited. The imbalance makes people, businesses and governments to make a choices about how to allocate resources efficiently.
What is a disadvantage of a command economy?
Encourages innovation and competition
Why do command economies often produce low-quality goods?
Lack of competition
Emphasis on quantity over quality
Limited consumer feedback
Which economic system allows the most individual freedom?
Market economy
A key difference between socialism and communism is that:
Socialism allows for some private ownership, while communism calls for complete government control of production
Define privatization and provide an example that I talked about.
Privatization is the transferring of ownership from government to private companies. During the fall of the Soviet Union, lots of government owned industries were sold to a select few.
What is the main idea of the laissez-faire theory?
The government should have minimal interference in the economy, allowing businesses to operate freely.
What is one potential drawback of a mixed socialist economy?
Heavy taxation to fund social programs
A disadvantage of a market economy is that:
It does not provide for everyone
What is the main role of an entrepreneur in an economy?
Combine land, labor, and capital to create goods and services
I talked about human capital in terms of economics, what idea does it refer to?
The knowledge, skills, and abilities of workers
Which economic system is characterized by habit, custom, and ritual?
Traditional Economy
What is a key characteristic of a mixed economy?
A combination of private and public ownership of resources
In a market economy, decisions about production and consumption are based on:
Voluntary exchange in markets
Adam Smith’s concept of the “invisible hand” refers to:
Market competition and self-interest leading to economic efficiency
Name a country that is considered to have a market economy?
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