chpt 2 economics system part 2

Traditional economy

The use of scarce resources and nearly all other economic activity is based on ritual (acts always done the same way)

Common economy

A central authority makes the major decisions about WHAT, HOW, and FOR WHOM.

Socialism

It's an economic and political system in which the gov owns some, but not all, of the factors of production.

Market

Is an arrangement where buyers and sellers interact to decide the prices and amount

Capitalism

An economic system where private citizen own and use the factors if production for their own profit and gain.

Disadvantages

- market economy doesn't provide for everyone

- market economy also may not provide enough of some basic goods and service

- the market economy has a high degree of uncertainly

What are the major problem with command economy?

- lack of motive to work hard/ show creativity

- lack of consumer choices

What are the main benefits of a market economy?

Increased efficiency , production, & innovation (Gives each person the freedom to make their economic choices.)