Economics Ch 2 sec 1

An economic system is

• shaped by the amount of scarcity a society experiences

• determined by the self-interest of the individuals in a society

• the way a society uses its resources to satisfy its people's wants

• the way a society limits its people's desires to easily fulfill them

In a traditional economy,

• the good of the group takes precedence over individual desires

• the individual must decide how to make a living for himself or herself

• men and women typically exchange jobs as necessary for the family

• each generation within a clan chooses the job it will specialize in

In a command economy,

• resources are allocated according to consumer needs

• decisions are made by families, clans, or tribes

• consumers and producers drive the economy

• government owns the means of production

What is one disadvantage of traditional economies?

• Individual families adopt new production methods without consulting others.

• The clans compete for resources.

• The system does not serve the societies goal of survival very well.

• People are less productive than they might be.

Why do workers in a command economy have little motive to improve their productivity?

• Central planners do not provide jobs that are appropriate for local conditions.

• Workers are paid the same wages regardless of their output.

• Production quotas set by planners are typically below a factory's capacity.

• The lack of consumer goods means people have little reason to work hard.

Under democratic socialism, the government

• owns all of the factors of production

• requires absolute obedience to those in power

• owns basic resources

• prohibits private ownership of property

In a command economy, what is one way government officials decide for whom goods will be produced?

• by setting wages

• by requiring some people to serve in the armed forces

• by collecting taxes

• by making laws that regulate business practices

The study of how people use their limited resources to satisfy their unlimited wants is called:

• Financial Literacy

• Personal Finance

• Home Economics

• Economics

The value of your next best alternative is called

• Economics

• Scarcity

• Opportunity Cost

• Incentive

An example of where a Command Economy (the government decides what goods and services are produced) still exists would be in:

• United States

• North Korea

• New Zealand

• Australia