Market economic system
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9 Terms
1
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what do changes in price cause
a shift in resources, from making products that are less popular to making those that are more popular
2
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what factors are key roles in market economic systems
* competition
* high profts
* high wages
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* high profts
* high wages
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3
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what are the advantages of a market economic system
* output reflects consumers taste
* consumers have more options
* prices are low to stay competitive
* hard work is encouraged due to competition
* consumers have more options
* prices are low to stay competitive
* hard work is encouraged due to competition
4
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what are the disadvantages of a market economic system
* output does not reflect full cost
* firms can abuse their market power
* resources become immobile
* products consumers want but cannot be charged for like street lights will not be produced
* firms can abuse their market power
* resources become immobile
* products consumers want but cannot be charged for like street lights will not be produced
5
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what does a market system reward
it rewards efficiency and punishes inefficiency
6
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when is allocative efficiency achieved
when products desired by consumers are made in the right quantity
7
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when is a firm productivly efficient
when it produces at the lowest possible average cost
8
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what does innovation lead to
dynamic efficiency
9
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what happens in a mixed economy
resources are allocated by means of both price mechanism and government decisions
Note 
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