Chapter 8: The Power and Limits of a Market

Market socialism

is an economic system that uses public property ownership and private resource allocation decisions.

Command capitalism

is an economic system that uses private property ownership and public resource allocation decisions.

Imperfect information

occurs when the full costs or benefits of a trade are not known to all of the parties engaged in the trade.

monopoly

A(n) is a market with only one seller of a good or service.

Economic security

means having a stable standard of living.

market capitalist systems

Trades that generate equilibrium between buyers and sellers in maximize the consumer and producer surplus derived from production and consumption.

Market capitalism is not equitable because

distributes goods and services based on willingness and ability to pay rather than on an equal distribution of goods and services among members of society.

Command systems

use governmental regulation or central planning to allocate resources.

capitalist systems

In , individual people, households, or businesses have tradable ownership rights to resources.

market capitalist systems

In , the people who have the highest willingness and ability to pay for a good or service obtain the good or service from suppliers who have comparative advantage in its production and are able to produce at the lowest cost.

resource allocation decisions

Choices about what to do with resources are resource allocation decisions.

resource ownership or property rights decisions

Choices about who owns resources are resource ownership or property rights decisions.