Economics test #2

how do command societies address the problems of scarcity

by only producing the goods that they assign priority to and thus depriving the individuals in the society from being able to satisfy some of their other wants

what is adam smith's invisible hand based on?

free market

What is more important in a traditional economy....individual wealth or honoring tradition?

honoring tradition

what are some disadvantages of a centrally planned economy?

it sets prices lower than what would be established if you had a market system. They also do not have a good understanding of local communities and they don't plan on helping to improve said communities.

advantage and disadvantage of traditional economies?

advantage: little disagreement about how things are done disadvantage: resistant to change

what is a market driven mixed economy?

A market-driven mixed economy is an economic system has some elements of traditional and command economies but emphasizes the market economy. The United States is a market-driven mixed economy because some communities stick to old customs, resembling a traditional economy, and there are government own industries, like public schooling and water, that resemble a command economy, but the most dominant type of economy is the market economy because of private property ownership and the free market.

advantages of market economy

Market economies give individuals freedom to make their own economic choices like what to buy and what job to have based on their interests and talents.

what factors caused North Korea's serious economic problems? what steps has North Korean govt taken to improve the dire economic situation?

Once under the control of China and later Japan, Korea was split into North Korea and South Korea following World War II. North Korea came under communist control i.e. the government controlled every economic decision During the late 1990s and early 2000s, food was so scarce that millions of North Koreans died from hunger and malnutrition. Many North Koreans survived only because of food aid from other countries, most notably South Korea. The failure to provide food and other important products was just one result of a flawed economic plan. For much of the 1990s, North Korea produced less and less each year, and its economy actually shrank. In 2003, however, central planners relaxed some restrictions on private ownership and market activity. North Koreans hoped that this experiment with free markets would revive the country's ailing economy.

disadvantages of market economy

Some disadvantages are that they have no mechanism for providing public goods and services such as the national defense, because it would not be profitable in a strctly economic stand point to do so. They also cannot provide security to those who can't be economically productive.

what are the essential elements of market economies?

The essential elements of market economies are private property, specialization, consumer sovereignty, seller competition, seller profit, voluntary exchange, and minimal government involvement.

what forces have contributed to the growth of the global economy

The opening up of the world's markets to trade, the development of faster, safer, and cheaper transportation, and telephone and computer linkages have contributed to the growth of the global economy.

advantages of a centrally planned economy?

They seek to provide for everyone, even sick and elderly people, and the nation's resources can be used to produce items that may not make money in a market economy, like medicines. Also, with the means of production owned by the government, the class struggle can be resolved and all citizens would get a fair share in the wealth.

how does the american economy include elements of traditional, command,and market economic systems

Traditional is like a barter system, probably like in the Middle Ages. Command is like communism, basically the gov controls everything and tells people what to do and what to produce. Free market is like what we have, people can produce any good they want and compete in the market to sell it and make a profit

what drives the choices of consumers and producers in a market economy?

self interest

what do the 3 economic systems have in common?

they all address scarcity by answering the 3 questions: what should be produced, how it should be produced, and for whom it will be produced