Unit 2 Economics

What are the major components of Capitalism?

• An economic system in which the means of production are privately owned and money is invested in businesses to make a profit. The key economic decisions emerge from the interaction of buyers and sellers in a free market. The government should stay out of the economy. The main goal is to make a profit and terms like innovation, and competition are used to describe capitalism.

• A political system where the government owns all property and controls all economic activity, with the goal of achieving equality among citizens.

• A system in which the means of production are owned collectively by the people and managed by the state, with profits distributed equally.

• An economic system based on traditional customs and barter, where goods and services are produced for personal use and trade within small communities.

What are the major components of Communism/Command?

• The government makes all the decisions on production, price and occupation. No private property. Karl Marx influenced this idea and the Soviet Union and North Korea have attempted this system. The main goal is a classless society with shared wealth or government ownership of all property (common property). Private property abolished, people will work, people would be of the same social class.

• Private businesses control all production and prices, and there is no government intervention. Wealth is distributed based on individual effort and competition.

• The government only regulates safety and environmental standards, but all property is privately owned and wealth is inherited.

• All citizens vote directly on every economic decision, and there is no central authority or government involvement in the economy.

What are the major components of Socialism?

• The goal is to benefit Society (think socialism= society) the people can own small businesses but the government controls major businesses. They are welfare states meaning they give necessities to all through higher taxes. Universal health care (the government provides health insurance for everyone).

• The government has no role in the economy and all businesses are privately owned.

• The main focus is on individual profit and competition, with minimal government intervention.

• The government controls all aspects of life, including personal property and freedom of speech.

What does the term “Laissez-Faire,” mean in relation to leadership style and economics?

• Laissez-Faire means “hands off” and refers to a leadership style where leaders are hands-off, allowing group members to make decisions, as well as an economic approach where the government does not interfere with the economy.

• Laissez-Faire means strict control and refers to a leadership style where leaders make all decisions and closely supervise group members, as well as an economic approach where the government regulates all aspects of the economy.

• Laissez-Faire means collaborative effort and refers to a leadership style where leaders and group members make decisions together, as well as an economic approach where the government and private sector work hand in hand.

• Laissez-Faire means authoritative rule and refers to a leadership style where leaders enforce rules strictly, as well as an economic approach where the government sets strict economic policies.

Describe a Free Market Economy.

• A “free market economy,” is one in which goods are bought and sold and prices are determined by the free market, with a little government control. Examples: the president allows inflation to rise without interfering, decision-making power lies in the hands of the individuals.

• A free market economy is one where the government sets all prices and controls production.

• A free market economy is one in which only the government can own businesses and individuals have no say.

• A free market economy is one where all goods and services are provided for free by the government.

Describe a Command Economy.

• A planned economy in which government intervention is important in allocating goods and resources and determining prices.

• An economy where all decisions are made by private individuals with no government involvement.

• A system where prices and production are determined solely by supply and demand.

• An economic system based on barter and trade without the use of money.

Describe a Mixed Economy.

• A system that combines characteristics of Capitalism and Socialism. People are allowed to make many decisions while the government will set up safeguards for consumer protection/safety. The US is an example of a Mixed Economy.

• A system where only the government controls all economic decisions and private ownership is not allowed.

• A system where only private individuals and businesses make all economic decisions without any government intervention.

• A system that is based solely on barter and does not use money or markets.

Describe Opportunity Costs.

• What a person sacrifices when they choose one option over another. The cost of making a decision.

• The total amount of money spent on a purchase.

• The profit earned from an investment.

• The physical effort required to complete a task.

What are the major differences in a capitalist economy and socialist economy?

• Capitalist Economy: Privately owned, competition brings out the best in people, everyone works for his/her own wealth, government only interferes in situations where laws have been broken. Socialist Economy: State owned, cooperation is the best way for people to coexist, everyone works for wealth which is distributed equally to everyone, government is fully involved.

• Capitalist Economy: State owned, cooperation is the best way for people to coexist, everyone works for wealth which is distributed equally to everyone, government is fully involved. Socialist Economy: Privately owned, competition brings out the best in people, everyone works for his/her own wealth, government only interferes in situations where laws have been broken.

• Capitalist Economy: Government is fully involved, everyone works for wealth which is distributed equally to everyone, state owned. Socialist Economy: Privately owned, competition brings out the best in people, everyone works for his/her own wealth, government only interferes in situations where laws have been broken.

• Capitalist Economy: Both state and private ownership, government is fully involved, everyone works for the common good. Socialist Economy: Only private ownership, government does not interfere, everyone works for personal profit.

How does a consumer influence production?

• By buying things, consumers help determine what's popular, and thus increase production of that item and even drive up the price.

• By setting government policies for factories.

• By directly managing production lines in factories.

• By creating new raw materials for manufacturers.