EC 110 Lecture Notes - Lecture 2: Equilibrium Point, Economic Equilibrium, Ceteris Paribus

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silvercicada472

4 Jun 2018

School

University of Alabama

Department

Economics

Course

EC 110

Professor

Kent Zirlott

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Chapter 3: Economic Systems

1. The Fundamental Economic Questions

1. The Questions

1. What is the best way to use the resources at disposal?

2. What should be produced given our resources?

3. Once it is decided to produce a certain set of goods and services, how

much of each item should be produced?

4. Who will get how much of each good and service?

2. Strategies for Dealing with the Fundamental Economic Questions

1. The Command Economy

1. The central government dictates what will be produced, how much of

each item is produced, and who will get how many of the final products

2. Communism and socialism

3. Prices can be set by the government

4. Wages can be set so there is no lower class

5. Goods and services usually distributed fairly/equally

2. Capitalism

1. An economic system where supply and demand determine prices

2. Prices, which are determined in free markets, coordinate the economy

1. resolve what and how much will be produced

3. Supply and demand

1. determines a person’s income

2. and therefore how much of the production the person can obtain for

his own use

4. Allocative efficiency

1. resources being deployed to produce just the right amount of each

product to satisfy society’s wants

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Related Questions

Which of the following is a correct statement about a mixed economy?

1. Firms determine how goods and services will be produced.

2. In a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources.

3. The government takes no part in the economy.

salmonraccoon110

Outline the flow of goods and resources to and from economic decision-makers. One way to understand how the economy works is the circular flow model. This model demonstrates the flow of resources, goods, services, and income between households and businesses through the resource market and the market for goods and services. In a few paragraphs, please:

1) Identify the primary economic decision-makers.

2) Describe how money and resources are exchanged in the resource market, indicating who gets the resource, and who gets the income.

3) Describe how money, goods, and services are exchanged in the product and services market, indicating who receives the goods and services, and who gets the income.

4) In addition, give a brief description of any other participants in an economy that are not represented in this simple model.

Refer to the Circular Flow model resources provided below:

The Circular Flow Diagram; http://econperspectives.blogspot.com/2008/04/circular-flow-diagram.html

Circular Flow of Economic Activity: The Flow of Goods, Services & Resources

http://study.com/academy/lesson/circular-flow-of-economic-activity-the-flow-of-goods-services-resources.html

Resource Market: Definition & Overview; http://study.com/academy/lesson/resource-market-definition-lesson-quiz.html

In addition, it should be written well using correct grammar, and references need to be properly APA formatted

ultramarineeel404

Outline the flow of goods and resources to and from economic decision-makers:

One way to understand how the economy works is the circular flow model. This model demonstrates the flow of resources, goods, services, and income between households and businesses through the resource market and the market for goods and services. In a few paragraphs, please:

1) Identify the primary economic decision-makers.

2) Describe how money and resources are exchanged in the resource market, indicating

3) Who gets the resource

4) Who gets the income

5) Describe how money, goods, and services are exchanged in the product and services market, indicating

6) Who receives the goods and services

7) Who gets the income

8) give a brief description of any other participants in an economy that are not represented in this simple model

Refer to the Circular Flow model resources provided below:

The Circular Flow Diagram; http://econperspectives.blogspot.com/2008/04/circular-flow-diagram.html

Circular Flow of Economic Activity: The Flow of Goods, Services & Resources

http://study.com/academy/lesson/circular-flow-of-economic-activity-the-flow-of-goods-services-resources.html

Resource Market: Definition & Overview; http://study.com/academy/lesson/resource-market-definition-lesson-quiz.html

In addition, it should be written well using correct grammar, and references need to be properly APA formatted

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EC 110 Lecture Notes - Lecture 2: Equilibrium Point, Economic Equilibrium, Ceteris Paribus

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