Goods and Services
The objects (goods) and the actions (services) that people value and produce to satisfy human wants (Under Basic Terms).
Wants and Needs
a need is something essential for survival eg. food. A want is something desirable but not essential to survival eg. coke (Under Basic Terms).
Basic Economic Questions
What to produce?
How to produce?
For whom to produce? (Under Basic Terms)
An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.
A method of production in which tasks are done by individuals in their rural homes (Under Traditional Economy).
Growing only enough food to meet a famliy's needs (Under Traditional Economy).
Not favored in a Traditional Economy, and hardly (if ever) happens.
Positives of a Traditional Economy
No need to struggle to survive, simple lives, no need to worry about money (Under Traditional Economy).
Negatives of a Traditional Economy
Little technology, all land is owned by the government, everything is less developed, dependent on crops (Under Traditional Economy).
In a Traditional Economy, there is little of this. The only kind of this there is includes simple items like shovels or other tools.
An economic system based on free enterprise, in which businesses are privately owned and production and prices are determined by supply and demand.
Scottish political economist and philosopher. His Wealth of Nations (1776) laid the foundations of classical free-market economic theory, government should not interfere with economics. Advocates Laissez Faire and founder of "invisible hand" (Under Market Economy).
Believed all people have a right to life, liberty, and property. His writing influenced economic/political history. Developed the concept of private property (Under Market Economy).
Classes and Separation of Wealth
The division of people depending on how much moeny they make and what their standard of living is (Under Market Economy).
Supply and Demand
An economic concept that states that the price of a good rises and falls depending on how many people want it (demand) and depending on how much of the good is available (supply) (Under Market Economy).
The high value or worth of something (Under Market Economy).
Individuals' exclusive rights to control the goods and services in their possession (private property) (Under Market Economy).
The people have the freedom to try anything they want in the economy, but they must take a chance. If they fail, they are on their own. (Under Market Economy).
Creates lower prices, higher quality, and choice (Under Market Economy).
Positives of Market Economy
The balance of supply and demand keeps prices fair. The government does not control private property. Government only interferes to protect workers' rights, property rights, and collect taxes. (Under Market Economy).
Negatives of Market Economy
Because of scarcity, there is concern over who gets the available resources. Buyers who can't afford prices won't get goods (Under Market Economy).
An economic system in which the government makes all economic decisions.
This man came up with the idea of communism/dialectic socialism that said that two classes have always battled against each other to form another class that will battle against its antithesis until the synthesis is one equal class working with each other for each other (Under Command Economy).
Worker and Business Owner Relationship
The owner can underpay their workers, which causes workers to have little motivation because they are not paid according to work (Under Command Economy).
Wants and Needs in Command Economy
Everyone's needs will be taken care of according to their own situation, but their wants will not be satisfied (Under Command Economy).
There is only one of these in a Command Economy, because everyone is equal.
Everyone is equal, and the government owns all land (Under Command Economy).
Not very efficient. Only needs are equally taken care of (not wants), causing motivation in workers to decrease, as well as quality and supply of goods to decrease. There is no competition and no supply and demand (Under Command Economy).
There is none of this in a Command Economy.
Positives of a Command Economy
Can allow countries to industrialize rapidly. Increases employment and literacy levels (Under Command Economy).
Negatives of a Command Economy
Prices set by the government don't reflect the cost of production, leading to waste. No motivation for workers. Poor quality goods. No other goals besides social ones are met (Under Command Economy).
Combines elements of the command and market economies.
Examples of Mixed Economies
USPS, Obama Care, etc.