Chapter 2- the market system

what are the two economic systems

the market system and the command system

what is another word of the market system

capitalism

what is another word of the command system

socialism/communism

what is the main difference in ownership of resources for the 2 economic systems

1. private ownership for the market system

2. government ownership for the command system

what is the main difference in coordination methods for the 2 economic systems

1. market and price for the market system

2. central planning for the command system

what is laissez-faire capitalism

pure capitalism= no government=0% taxes

what is the definition of laissez-faire

hands off or let it be

what are the four market structures

pure competition, monopolistic competition, oligopoly, monopoly

example of pure competition

agriculture

example of monopolistic competition

restaurants/ hotels

example of oligopoly

airlines

example of monopoly

household utilities

consumer sovereignty

determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy

dollar votes

the "votes" that consumers and entrepreneurs cast for the production of consumer and capital goods, respectively when they purchase those goods in product and resource market

how are good and services produced

using product efficiency ad it is the least costly way