ECON Unit 1 Market

5 Pillars of free market

1. Competition: Struggle among sellers to attract consumers with the best product at lowest price

2. Economics freedom: Individuals and businesses able to make choices in own interest 

3. Private property: People can own and control their possessions as they wish.

Incentive: Expectations that encourages people to behave in a certain way.

4. Profit motive: incentive to improve one’s material well-being

Profit: Amount of revenue from the sale of a product that exceeds the cost of everything

5. Voluntary exchange: Act of buyers and sellers freely and willingly engaging in market trasactions

Mixed capitalist

When industry and resources are left to outcomes of free market

Mixed socialist

When industry and resources controlled and provided by government

Socialism

Economic system where government controls many, but not all, large industries and basic productive resources (not for profit)

Some are societies where citizens have given government power to answer 3 BQs

Communism

Classless society where the public owns and controls the means of production

People contribute according to their abilities and consumer according to their needs 

Privatization

When an industry that was publicity owned (government owned/controlled/operated) moves into private sector

Nationalization

When on industry that was privately owned (private sector) move into public sector (government owned/controlled/operated)