Slide 55 Copyright © Pearson Education, apter 2 Section 1 Hong Kong Hong Kong represents one of the world's freest markets. Slide 5 Copyright © Pearson Education, apter 2 Section 1 Introduction What goals and values affect how a society answers the key economic questions? According to Smith, consumers will respond to the positive incentive of lower prices by buying more goods because spending less money on a good lowers the opportunity cost of the purchase. Slide 50 Copyright © Pearson Education, apter 2 Section 1 The Rise of Free Markets Even free market thinkers like Adam Smith recognized the need for a limited degree of government involvement in the economic marketplace. Economic systems quizlet answers. Upload your study docs or become a. Slide 9 Copyright © Pearson Education, apter 2 Section 1 Question 3 Who consumes goods and services? Each society must decide how to divide its economic pie.
Smith called this self-regulating mechanism of the market "the invisible hand. " Slide 32 Copyright © Pearson Education, apter 2 Section 1 The Customer is King in a Free Market Economy Customers have the power to decide what gets produced. The government protects private property and rarely interferes in the free market, aside from establishing wage and price controls on rent and some public services. Analyze a circular flow model of a free market economy. Chapter 2 economic systems answer key of life. Using resources widely and reducing waste. Slide 44 Copyright © Pearson Education, apter 2 Section 1 Disadvantages Nations with command economies often have trouble meeting the basic economic goals. The Government discouraged competition by determining prices, wages, and products.
Slide 36 Copyright © Pearson Education, apter 2 Section 1 Key Terms centrally planned economy: an economic system in which the government makes all decisions on the three key economic questions command economy: another name for a centrally planned economy socialism: a range of economic and political systems based on the belief that wealth should be distributed evenly throughout society. Communism: a political system in which the government owns and controls all resources and means of production and makes all economic decisions authoritarian: describing a form of government which limits individual freedoms and requires strict obedience from their citizens. Chapter 2 economic systems pdf. Economic Equity: The situation in an economy in which the apportionment of resources or goods among the people is considered fair. Because resources are limited, each decision that a society makes about what to produce comes at an opportunity cost. Slide 57 Copyright © Pearson Education, apter 2 Section 1 Government Intervention The American government intervenes in the economy by: –Keeping order –Providing vital services –Promoting general welfare Federal and state laws protect private property. Despite the advantages of a free market economy, no country today operates under a pure, unregulated free market. Slide 24 Copyright © Pearson Education, apter 2 Section 1 Specialization Rather than being self-sufficient, each of us specializes in a few products or services.
Analyze the societal values that determine how a country answers the three economic questions. Use your answer to explain why thermonuclear weapons require regular maintenance. Tritium is a radioactive form of hydrogen (containing proton and neutrons) with a half-life of about years. Command economies oppose: –Private property –Free market pricing –Competition –Consumer choice. Slide 26 Copyright © Pearson Education, apter 2 Section 1 Circular Flow Model of a Market Economy Shows how households and firms exchange money, resources, and products. Self-interest is the motivating force in the free market. As a society decides how to produce its goods and services, it must consider how best to use its land, labor, and capital. Some images used in this set are licensed under the Creative Commons through. The figure below shows a continuum of mixed economics in today's world. Slide 30 Copyright © Pearson Education, apter 2 Section 1 Competition –Firms seek to make higher profits by increasing sales. Amutationofaglutamicacidresiduetoalysineinanenzymeinthecellwillmostlikelydisrupt. Each choice comes with some kind of trade-off. Consumers pursuing their self-interest have the incentive to look for lower prices. Slide 11 Copyright © Pearson Education, apter 2 Section 1 Economic Efficiency Because resources are always scare, societies try to maximize what they can produce using the resources they have.
Markets, like a farmer's market, a sporting goods store, and the New York Stock Exchange, eliminate the need for any one person to be self-sufficient. C. The child lacks the ability to react to a dangerous situation. Slide 13 Copyright © Pearson Education, apter 2 Section 1 Economic Equity Economic equity is another economic goal that is defined differently in different societies. The complex bureaucracy of a command economy is not efficiently run and does not adjust quickly to market changes.
Economic transition: a period of change in which a nation moves from one economic system to another privatization: the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace free enterprise system: an economic system in which investments in firms are made in a free market by private decision rather than by state control. Consumers would often wait in long lines at stores, only to discover that there was nothing to buy. Sets found in the same folder. A free market economy is characterized by: Self-interest Competition Economic freedom, efficiency, and equity. Explain why markets exist.
There is minimal, if any, economic freedom. The government owns both land and capital. Slide 31 Copyright © Pearson Education, apter 2 Section 1 Advantages of a Free Market Under ideal conditions, free market economies meet the following economic goals: –They respond to rapidly changing conditions. Slide 14 Copyright © Pearson Education, apter 2 Section 1 Economic Growth A society also strives for economic growth. A nation's economy must grow so it can provide jobs for the new people joining the workforce. Specialization leads to efficient use of land, labor, and capital.
A society's values, such as freedom or tradition, guide the type of economic system that society will have. Slide 19 Copyright © Pearson Education, apter 2 Section 1 Key Terms market: any arrangement that allows buyers and sellers to exchange things specialization: the concentration of the productive efforts of individuals and businesses on a limited number of activities free market economy: an economic system in which decisions on the three key economic questions are based on the voluntary exchange in markets household: a person or group living in a single residence.