Marketing: Who's the boss quiz
Explain two reasons why we need economic systems
Because our wants are unlimited but our resources are not and people in all economic systems are interdependent.
examples of a communist economic system
Famous communism systems in history: Soviet Union and China but the Soviet dissolved in 1991 and communism is disappearing in China. Present day examples: Cuba and North Korea.
role of producers in a market economy
Producers use resources to make whatever customers want and are willing to buy.
What are three types of participants found in economic systems
Producers, consumers, government.
problem with market economic systems
businesses run the risk of financial loss, they may experience legal problems, competition, and some people's income is higher than others.
Medium of exchange
something of value that can be used to obtain goods or services. The most common medium is money.
traditional economic systems are also called
subsistence systems
Communism
the government owns and controls practically all of the means of production and distribution. The government does all of the economic planning (called central planning), makes all economic decisions, and is in the control of the economic system. Government chooses your job and your wage and price.
Economic system
the organized way in which a country handles its economic decisions and solves its economic problems. In other words, it's the way in which a country makes its earning and spending decisions. No two nations' economic systems are the same.
problem with traditional economic systems
there is little opportunity for growth or improvement. Few new ideas are accepted, and new technology is shunned. They consume everything so nothing can be saved for greater production.
Traditional economic system
this economic system is based on traditions passed down through generations. Decisions are made based on beliefs and jobs are passed down to children. People consume all that they produce to satisfy needs.
lack of growth and progress
traditional
socialist countries are also called
welfare states
problem with communist economic systems
government controls its economy so they are controlling their people as well. The government controls people's type of education they receive, what job they get, where they live, and their income. They produce industrial goods not consumer, so the few consumer goods are low quality. Businesses are not allowed to find better methods of production.
Socialism
government owns some basic means of production but there is private ownership of businesses as well. Government sets pay for workers but you are allowed to choose where to work, and they provide free benefits like free medical care, education, welfare, and more.
Command economic system
small group of people are in command of all the others. The government owns and operates many or all means of production and distribution. This system is broken into two types which are communism and socialism.
government owns parts of production
socialism
high taxes
socialism
examples of a socialist economy
Canada, Sweden, Great Britain. But Sweden and Great Britain have changed some socialism aspects of their economy.
What are the four basic elements found in all economic systems
Resources, markets, participants, medium of exchange.
role of government in the US economy
The government regulates the economy but doesn't control it. They generally refrain from telling producers and consumers what to do, but they do enforce consumer safety regulations, labor laws, and other directives businesses must follow. They lessen economic problems like recessions and produce goods and services like education.
problem with socialist economic systems
To pay for their many human-service programs, they levy high taxes so people have less money to spend. private businesses cannot compete with state owned businesses. workers are paid according to the value government sees the job as.
examples of a market economy
United States, Japan, India.
examples of a traditional economy
Villages in Andes Mountains, Amazon Rainforest communities, Aborigines of Australia, rural areas in Africa.
how market economic systems answer the three basic questions
What will be produced, consumers decide by casting economic votes through their purchases but price is the deciding factor as producers want to be profitable. How it will be produced, producers use production methods and competition is an important factor How it will be allocated, income determines who gets what.
three basic economic questions
What will be produced, how will products be produced, how will products be allocated.
how traditional economic systems answer the three basic questions
What will be produced, people produce the same things their ancestors did. How it will be produced, they use the same methods as their ancestors. How it will be allocated, people use what they produce and share the rest with their community. There are no income, prices, or markets.
how socialist economic systems answer the three basic questions
What will be produced, planning is done by government but supply and demand is taken into consideration. How it will be produced, government decides for basic products but other decisions are made by private businesses. How it will be allocated, consumers' income decides what they can buy but the job they choose the government sets the pay so the government influences what they can buy.
how communist economic systems answer the three basic questions
What will be produced, the government decides and they base their plans based on what they want not consumer needs. How it will be produced, the government decides and tell businesses what methods to use. How it will be allocated, government decides as well.
Markets
arrangements for the buying and selling of goods and services. Economic markets are made up of both buyers and sellers.
government makes all economic decisions
communism
government set production quotas
communism
government tells workers where they work
communism
prices set by government
communism
Participants
include producers, consumers, and government. Producers make or provide products, consumers purchase products, and government make and enforces the country's laws.
Resources
includes natural resources, human resources, and capital goods.
Marketing economic system
individuals and businesses own the means of production and distribution. Government control of businesses is limited, businesses compete for sales and profits. People can use their wages and profits how they want and they can live and work where they choose.
consumers make economic decisions
market economy
free competition
market economy
government regulates but does not control economy
market economy