ECON-101- Midterm Exam Guide - Comprehensive Notes for the exam ( 38 pages long!)
Document Summary
The command system: also known as socialism or communism, government ownership or resources, decisions made by a central planning board, north korea, cuba, myanmar. The market system: a mix of decentralized decision making with some government control, systems found in much of the world, private markets are dominant force, private ownership of resources, self-interested behavior. Characteristics of the market system: private property, freedom of enterprise, freedom of choice, self-interest, competition, market and prices. Technology and capital good: advanced technology and capital goods are encouraged, specialization, division of labor, geographic specialization. Use of money: money makes trade easier, medium of exchange, without money, people would have to barter. Active, but limited government: government maybe needed to alleviate market failures, government can increase effectiveness of a market system, possible government failure. Who will get the output: consumers with the ability and willing ness to pay will get the product, ability to pay depends on income.