chapter 12- market economic system
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8 Terms
what is an economic system
an economy where resources are many allocated by demand and supply with limited government intervention
what is a private sector
a section of the economy where businesses and individuals are owned and controlled by private individuals rather than the government
what is a public sector
a section of the economy where businesses and firms are owned and controlled by the government rather than individuals
what is the price mechanism
the use of changes in price to signal change in demand and supply
why does a market economy give consumers choice
firms compete to attract customers encouraging them to try different products
why can competition be beneficial
it can encourage firms to lower prices, improve quality and become more efficient
why is profit an incentive
firms that satisfy consumers demand can earn higher profits, encouraging them to produce what consumers want
why can inequality occur
income and wealth depend partly on ownership of resources and earnings, which can differ between individuals