Studied by 0 people
economics systems
set of institutional arrangements and a coordinating mechanism
laissez-faire/pure capitalism
minimal to no government intervention
command system
total governmental control
mixed/market economy
individual decision-making and self-interest, government regulated
market system characteristics
efficiency, incentives, freedom
what will be produced?
goods and services making profit continue to be produced, if not, they won’t
how will it be produced?
minimization of cost per units of output, right mix of labor and capital
who will get the output?
those with sufficient income
how will the system accommodate change?
preferences indicated by buying patterns, self-interest-driven expansion
how will it promote progress?
market system provides incentive for advancement
the “invisible hand”
companies follow self interest & produce most wanted product, therefore satisfying public interest
why do command systems fail?
too centralized, no incentive
a market system creates a continuous flow of…
money, goods, services, and resources
a market system is inherently a…
rewards and consequences system
who is subject to risk in a market system?
owners only
what are the benefits of restricted risk?
1) attracting and maintaining inputs, 2) focusing attention
Note 
Flashcard (25)