2.1 The key Economic Questions
What are the three basic economic questions?
What goods and services should be produced?
How Should these goods and services be produced?
Who consumes these good and services?
Firms purchase factors of production from households.
Factor Market
What market system has a higher amount of Government involvement?
Command Economy
The doctrine that governments generally should not intervene in the marketplace.
Laissez-Faire
Drives individuals and businesses to make decisions that improve their material well-being.
Profit Motive
This is the income people receive in return for supplying factors of production, land, labor, and capital.
Factor Payments
The arena in which households buy the goods and services that firms produce.
Product market
Name two things Socialism and Communism have in common?
1. Even distribution of wealth.
2. Centralized control of the economy.
Property owned by individuals or companies and not by the Government.
Private Property
This is the principle that everyone has the same legal rights.
Legal Equity
A set programs to protect people who face unfavorable economic conditions.
Safety Net
Who said this? ... "Give me that which I want, and you shall have this which you want."
Adam Smith
A government that limits individual freedom.
Authoritarian
What are books, songs, or movies example of?
Intellectual Property
Allows consumers and producers to decide what, when, and how they buy and sell.
Voluntary Exchange
What we call the level of economic prosperity.
Standard of living
Which book does this concept come from..."The buyer and seller consider only their own self-interest."
The Wealth of Nations
Which country has moved from a command economy to having my free market components?
China
When a Country moves from one side of the economic spectrum to another.
Economic Transitions
This is a private organization that tries to persuade public officials to act in ways that benefit its members.
Interest Group
Traditional Economies rely on what three things?
1. Habit
2. Custom
3. Ritual
What is it called when there is hope of reward to encourage a person to do an action?
Incentive
Which Economic System:
1. Requires revolutionary change.
2. Government is authoritarian.
3. State ownership of factors of production.
Communism
Which Country is the closest to a Free-Market system on the spectrum?
Singapore
When did the FDA(Food and Drug Administration) come out?
1906