Crony Capitalism

The video discusses the dynamics of a capitalist society, where the private sector largely drives production with minimal government involvement. It explores how close relationships between private enterprises and government officials can lead to crony capitalism, resulting in economic distortions and harm to consumers due to reduced competition and increased prices.

What is a key characteristic of a capitalist society?

• Government ownership of all resources

• Fixed prices for all goods

• Production based on consumer demand

• High government control over production

How can private enterprises gain a competitive advantage in a capitalist society?

• By forming close relationships with government officials

• By reducing their production costs

• By increasing their advertising budget

• By expanding their product line

What is a common method used by private enterprises to secure favoritism from government officials?

• Offering better products

• Providing bribes or incentives

• Increasing market share

• Lowering prices

What is one potential consequence of crony capitalism for consumers?

• Increased variety of products

• Lower prices for goods

• More government subsidies

• Higher prices due to reduced competition

How does crony capitalism affect market competition?

• It ensures equal opportunities for all firms

• It increases the number of competitors

• It reduces competition by favoring certain firms

• It has no effect on competition