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Worksheets2 - Fundamentals of Economics
Total questions: 20
Worksheet time: 10mins
An economic system based on private ownership and the use of capital.
Capitalism
Communism
Command Economy
Socialism
An economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally.
Capitalism
Communism
Command Economy
Socialism
The central government makes all important decisions in the best interest of the society.
Capitalism
Communism
Command Economy
Socialism
An economic system in which factors of production are owned by the public and operate for the benefit of all.
–Private ownership is still allowed
Capitalism
Communism
Command Economy
Socialism
–letting owners of industry and business set working conditions without interference
■No government regulations, such as minimum wage laws
Laissez faire
Capital
Wealth in the form of property or money that is used to make more money.
Laissez faire
Capital
The government answers those questions. There's no private business. There's no private property. The government decides.
Communism
Capitalism
Socialism
The people make those decisions. The businesses, the market decides how much products will cost, how many there are, where it will be made.
Communism
Capitalism
Socialism
There's a mix of both. The government operates the system to help all, but there is opportunity for private property and private wealth.
Communism
Capitalism
Socialism
Market Systems:
■Traditional Economy:
Customs dictate the economic decisions
In a market economy, decisions on how resources are to be allocated are usually taken by millions of households and thousands of firm
In this second type of economy, the government has a central role in all decisions that are made and, unlike the market economy, the emphasis is on centralization.
As its name indicates, it involves both private and public sectors in the process of resource allocation.
Market Systems:
■Free/Market Economy:
Customs dictate the economic decisions
In a market economy, decisions on how resources are to be allocated are usually taken by millions of households and thousands of firm
In this second type of economy, the government has a central role in all decisions that are made and, unlike the market economy, the emphasis is on centralization.
As its name indicates, it involves both private and public sectors in the process of resource allocation.
Market Systems:
■Planned/Command Economy:
Customs dictate the economic decisions
In a market economy, decisions on how resources are to be allocated are usually taken by millions of households and thousands of firm
In this second type of economy, the government has a central role in all decisions that are made and, unlike the market economy, the emphasis is on centralization.
As its name indicates, it involves both private and public sectors in the process of resource allocation.
Market Systems:
■Mixed Economy:
Customs dictate the economic decisions
In a market economy, decisions on how resources are to be allocated are usually taken by millions of households and thousands of firm
In this second type of economy, the government has a central role in all decisions that are made and, unlike the market economy, the emphasis is on centralization.
As its name indicates, it involves both private and public sectors in the process of resource allocation.
■A model used to highlight and clarify scarcity, and issues such as efficiency, tradeoffs, opportunity cost and growth, which are associated with scarcity.
The Production Possibility Frontier PPF
Allocative efficiency
Productive efficiency
■Resources must be allocated to the production of goods & services that people want the most “getting the best mix”
The Production Possibility Frontier PPF
Allocative efficiency
Productive efficiency
Production must be carried on in the least costly way.
The Production Possibility Frontier PPF
Allocative efficiency
Productive efficiency
P.P.F. Assumptions:
All resources (land, labour, capital, other) are used
Productive efficiency is achieved
Given point in time
–Resources are fixed in quantity but can be shifted around
–Technology doesn’t change
Only 2 goods are produced in this economy
ALL OF THE ABOVE
How much of one good is sacrificed to produce one of the other good.
The Production Possibility Frontier PPF
Allocative efficiency
Productive efficiency
The opportunity cost
–increase quantity &/or quality of resources Þ growth
–improve technology Þ growth
PPF shifts to the right
PPF shifts to the left
–decrease quantity &/or quality of resources Þ negative growth
–technology decrease Þ negative growth
PPF shifts to the right
PPF shifts to the left
