Economic Systems & Government Involvement
How does government involvement differ between a market economy and a planned economy?
In a market economy, the government has limited involvement.
In a planned economy, the government plays a large role in controlling production, pricing, and distribution of goods and services.
What type of economy values individualism more than cooperation?
A market economy.
What is a pension?
Regular payments made to individuals aged 65+ after they retire, based on their previous work history or contributions, to help support them financially in their retirement.
Does competition benefit consumers or businesses more? Provide one example of how it benefits them.
Competition benefits consumers more, as it typically leads to lower prices, higher quality of products and services, and more choices.
What are the definitions of supply and demand?
Supply is the quantity of a product or service that producers create; Demand is the wants and needs of consumers for products and services.
In which type of economy do taxes tend to be higher or lower?
In a planned economy, taxes tend to be higher.
In a market economy, taxes tend to be lower.
In a mixed economy, taxes tend to fall somewhere in between.
Which type of economy is driven by the mechanisms of competition and the laws of supply and demand to guide economic decision-making?
A market economy.
Name one current government-owned corporation in Canada.
Current crown corporations in Canada include: Canada Post, CBC, Via Rail, National Film Board, and so on.
What is scarcity?
In economics, the idea that land (materials), labour and capital (money) limit the supply of what people want and need.
When a product or service is scarce, it means that there is a shortage.
According to the laws of supply and demand, when the demand of a product decreases, but the producers still have a large supply, what will most likely happen to the price?
The price will most likely decrease to sell the rest of the product.
In which type of economic system—market or planned—would universal healthcare and social programs like Employment Insurance (EI) be more likely supported?
A planned economy or mixed economy, depending on how much government involvement is emphasized.
In a small city, the only taxi service has raised its fares so high that many residents can no longer afford to use it. In response, the government steps in and establishes a new taxi service with more affordable rates. This new government-owned business is known as a _______.
This would be an example of a crown corporation.
What is one reason why the government might create a business or corporation?
A crown corporation might be created to:
1. provide essential services
2. promote economic development
3. support Canadian culture & identity.
What does it mean when one producer or company controls the supply of a certain product or service?
This is known as a monopoly.
According to the laws of supply and demand, when the price of a product increases, what is most likely to happen to the demand?
The demand will most likely decrease.
In which type of economy would subsidies for lower-income families, such as assistance for daycare or housing, be more likely to be supported?
A planned economy or mixed economy, depending on how much government involvement is emphasized.
The only gas station in a large town, which serves both the town and nearby rural areas, is close to bankruptcy. To ensure the population has access to fuel, the government steps in and provides financial assistance. This situation most likely occurred in a ______ economy.
A planned or mixed economy, depending on how much government involvement is emphasized.
In a small city, the only taxi service has raised its prices so high that many residents can no longer afford to use it. In response, the government steps in and opens a new taxi service with more affordable rates. This new government-owned business is known as a _______.
This would be an example of a crown corporation.
What are the three factors of production?
The 3 factors of production are:
1. land (materials)
2. labour (workers)
3. capital (money)
According to the laws of supply and demand, when demand of a product increases but supply decreases, what happens to the price?
The price will most likely increase.
The only gas station in a large town, which serves both the town and nearby rural areas, is close to bankruptcy. To ensure the population has access to fuel, the government steps in and provides financial assistance. This situation most likely occurred in a ______ economy.
A planned or mixed economy, depending on how much government involvement is emphasized.
A company faces public backlash for mistreating its employees, and as a result, customers decide to stop shopping there until the company addresses the issue. This action is an example of a _______.
What is one way governments might try to help protect or create jobs?
Answers may include: employment insurance (E.I.), labour laws (safety regulations or overtime pay), minimum wage, retraining programs, the creation of crown corporations, and so on.
In a small city, there has always been only one grocery store. Then, a new store opens nearby, offering weekly coupons. In response, the original store starts offering a loyalty points program to encourage customers to continue shopping there. This situation is an example of _______.
This is an example of competition.
What is it called when the supply of a product meets the demand, and it is offered at a price that satisfies both consumers and businesses?
The state of equilibrium.