Types of Economies
What 3 things are Economic systems based on?
Ownership, Resource allocation, and government involvement
What is an example of a Traditional Economy?
Inuit Tribe
What is a Free Enterprise System?
An economic model where everyone is free to start a business or enterprise
What is a Modified Free Enterprise System?
The type of mixed economy that includes some government protections, provisions, and regulations to adjust the system
What is an economic system?
Frameworks that define how societies produce, distribute, and consume goods and services.
What is a Traditional Economy?
Based on customs, history, and beliefs, this system often relies on agriculture and subsistence, aiming for survival rather than growth
Where is Command Economy common?
In Communist countries such as North Korea
_____________________________ is the basis for market economies. Individual choices
Individual Choices
What are the three characteristics of a Public Good?
What is a Toll Good?
A good that is consumed by the public but people can be excluded from using them
What is a Command Economy?
A centralized authority, such as the government, controls all economic activity, production, and distribution.
How are prices determined in a market economy?
Supply and Demand of consumers and producers
What is the freedoms of the Free Enterprise Systems?
Open Opportunity, Legal Equality, Free contracts
What is a negative Externality?
Negative or cost for the people not involved in the economic activities
Ex) Pollution in a river
What is a Subsidy?
A government payment that helps cover the cost of an economic activity that is deemed as public interest
What is a Market Economy?
A theoretical fully Free Market where Individuals and businesses own resources and make economic decisions based on supply and demand
What is the main characteristic of a Market Economy?
No government involvement, "laissez-faire" capitalism
How do producers and consumers decide on a market price
Producers want to make a profit, so they price high. Consumers want to pay as little as they can so they price low. Then they meet in the middle to find a price that allows producers to make a profit, but low enough that consumers will pay it
Which sector is responsible for infrastructure and what is an example?
Both Private and Public
highways, powerlines, policemen, firefighters, education, sewer systems, etc.
What is an Economic Safety Net?
Government programs for people that are temporarily struggling or experiencing economic hardship
What is a Mixed Market Economy?
A hybrid system combining elements of both market and command economies. Private enterprise exists, but the government intervenes
In which economic system is there no competition?
Command Economies
What increases as new businesses enter a market?
Competition
What are three ways that Governments address poverty?
Encourage Economic Growth, Transfer payments, Public Transfer Payments
What is a public interest project?
an initiative, legal action, or endeavor designed to advance the well-being of the general public, rather than to secure private profit or benefit.