Textbook Notes (363,566)
Canada (158,433)
Economics (923)
ECN 104 (388)
Chapter 2

Chapter 2

4 Pages
Unlock Document

Ryerson University
ECN 104
Halis Yildiz

Chapter 2: The Market System and the Circular Flow 2.1 Economic Systems Economic system: a particular set of institutional arrangements and a coordinating mechanism to respond to economic problems Determines what & how goods are produced, who gets them and how to accommodate change & promote technological process Differs who own factors of production and methods used to motivate, coordinate, direct economic activity Command system: an economic system in which most property resources are owned by government & economic decisions are made by a central government body (socialismcommunism) Market system: an economic system in which property resources are privately owned and markets & prices are used to direct and coordinate economic activities (capitalism) 2.2 Characteristics of the Market System Private property: private individuals & firms (not government) own most of the property resources (land & capital); name of capitalism Freedom of enterprise: freedom of firms to obtain & use economic resources to produce choice of goods & services to sell in chosen markets Freedom of choice: Owners can usesell property as they choose Workers can work where they like Consumers can buy what they want Self-interest is the motivating force: Businesses seek to maximize profitsminimize losses Property owners try to get highest price for the salerent of their resources Consumers seek to maximize their utility at the lowest possible expense Competition: Independently acting sellers & buyers operating in a particular productfactor market Freedom of entry & exit on the basis of their economic self-interest Markets & Prices: www.notesolution.com
More Less

Related notes for ECN 104

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.