Economic Systems 2.1

How does a traditional economy answer the basic questions of WHAT, HOW, and FOR WHOM to produce?

• Customs, traditions, and the elders decide WHAT, HOW, and FOR WHOM to produce

• The government decides WHAT, HOW, and FOR WHOM to produce

• Consumers decide WHAT, HOW, and FOR WHOM to produce

• Society decides WHAT, HOW, and FOR WHOM to produce

What's a main disadvatage of a traditional economy?

• Traditional economies tend to have a higher standard of living than other types of economies

• Sharing a valued practice in a traditional economy

• Everyone knows their role to play in the economy

• Individuals who act differently, break the rules, or try something new are punished

Which type of economy is best able to adjust to change over time?

• Traditional

• Market

• Socialist

• Command

Who makes the decisions in a command economy?

• Elders and tradition

• Individuals

• A king or ruler with absolute power

• Consumers

What's a key difference between a command economy and socialism?

• The government of a command economy owns all of the productive resources, whereas the government of a socialist economy owns just some.

• The government makes all production decisions in a socialist economy, whereas the government makes some, but not all, production decisions.

• They are identical economic systems; socialism is just a more modern term.

• Socialism is based on tradition and sharing, whereas a command economy is based on the decisions of a central authority.

What is the key similarity between a command economy and socialism?

• The major economic decisions are made by government for the people, not by the people.

• The major economic decisions are made by the people and government.

• Both aim to primarily enhance the welfare of its leaders first.

• Individuals own most of the resources in both types of economies.

Which is a modern example of a command economy?

• Inuit of Northern Canada

• United States

• North Korea

• African Mbuti

Which type of economy has a disadvantage in that it produces low-quality goods?

• All types of economies are disadvantage this way

• Market

• Traditional

• Command

A market economy allows buyers and sellers to do what?

• Follow consumer traditions

• Interact with government officials to demand production

• Commonly own all resources in the economy

• Make their own decisions regarding what to buy or what to sell

What's a benefit of having privately owned resources in a market economy?

• The wealthy own public resources

• Private owners don't have an incentive to provide enough goods and services to meet all public and private needs

• Private ownership means high a high degree of certainty since each owner can be assured they have no competition

• People take better care of productive goods and resources when they actually own them