Ch.2+notes&hw

Ch. 2.1 #1-5, 8 1. The economic system is, the method used by a society to produce and distribute goods and services. 2. Traditional, market, command, and mixed economy differ by traditional being an economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services. Command economy is when a central authority is in command of the economy. A centrally planned economy is also called command economy. A mixed economy is a market based economy system with limited government involvement. A market economy is makes decisions on production and consumption of goods and services are based on voluntary exchanges in market. 3. Factor payments are the income people receive for supplying factors production- land, labor, capital, or entrepreneurship. Land owners receive rent and workers receive wages. 4. Governments provide safety nets for citizens because they would have a set of government programs that protect people experiencing any set backs or unusual economic conditions. These may include layoffs, retirement, and injuries. 5. One example of traditional is, communities that tend to stay relatively small and close. A command economy is a centrally planned economy. Market economies are free markets or capitalism. 8. The 3 economic questions that are usually asked are, “what goods and services should be produced,” and “how should these goods and services be produces,” and “who consumes the goods and services?’

Ch 2.2 #1-8 1. Specialization makes us more efficient by being the concentration of the productive effort of individuals and firms on a limited number of activities. 2. The difference between factor market and the product market is that a factor market purchase the factors of production from households, and a product market is when the market in which the households purchase the goods and services that firms produce. 3. Profit is a financial gain made in a transaction. 4. The roles of households and firms in a market economy are being able to have a buyer or seller. The household is a person that lives with others. And a firm is an organization that uses resources to produce a product. 5. Competition benefits consumers because of all the competition to lower prices within the stores. When businesses want to get your money they will lower their costs in hope of getting more sales and getting more customers. 6. Adam Smith said the invisible hand as a way to describe the self regulation nature of a market place. 7. The connection between insensitive and consumer sovereignty in a free market economy by, consumer sovereignty being the power of consumers to decide what gets produced. 8. Economic equity is difficult to achieve in a free market economy because, there isn’t any strict regulation in a free market. Therefore economic equity seems to be difficult to achieve in a free market.

Ch 2.3 #1-4 1. Socialism and communism differ by, socialism being a social and political philosophy based in the belief that democratic means should be used to distribute wealth evenly through society. Communism is characterized by a centrally planned economy and the economy is with all the economic and political power resting in the hands of the central government. 2. An authoritarian government is characterized by, strict obedience from citizens and no freedom of judgment and action. 3. The soviet collectives offer little incentive to farmers by, farmers receiving either a share of what they produced or an income from its sale. 4. In the Soviet Union an opportunity cost of the emphasis on heavy industry are, leftovers, lower quality resources, so they could not use the scrapes to make anything else out of it, or by recycling. Ch 2.4 #1-5 1. Laissez faire is the idea that the government generally should not intervene in the market place. 2. Some nations have transitioned to the free enterprise because; in a free enterprise system investments are determined in a free market by private decisions rather than by state controls. 3. Nations with centrally planned economies sometimes slow to succeed when they privatize industry because; they cannot agree to sell state-run firms to individuals. Then after they would be able to compare with each other in a market place. 4. The united states free enterprise system differs from the communism system, because the free enterprise system allows each individual to sell to their pace and generally will not be intervened by the government. With communism government the business have to be told what to sell, how to sell it and at how much to sell it for. 5. The benefits that might make citizens of a centrally planned economy move toward a market-based system is, the idea that they might be able to have less competition and have better prices without so much government involvement.

Ch 2.1
 * Scarcity forces societies and nations to answer some difficult situations. An economic system is the method used by a society to produce and distribute goods and services. The three economic goals are based on the goods and services and how they should be produced, received, and distributed.
 * Because of our limited resources each production decision hat a society makes comes at an opportunity cost.
 * The answer to the question of distribution is determined by how societies choose to distribute income.
 * Factor payments are the income people receive for supplying factors of production, land, labor, capital, or entrepreneurship.
 * Each society answers the question of distribution based on its unique combination of social values and goals. Patriotism is the love of one’s country the passion that inspires a person to serve his or her country, either in defending it from invasion or protecting its rights and maintaining its laws and institutions.
 * The safety net of the government is that it has various programs that protect people from experiencing unfavorable economic conditions.
 * The standard of living becomes visible when the level of economic prosperity is at its level.
 * Traditional economy is an economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services. A market economy is the economic system in which a decision on production and consumption of goods and services are based on voluntary exchange in markets.
 * A centrally planned economy is an economic system in which the central government makes all decisions on the production and consumption of goods and services.
 * A command economy is an economic system that shows which central authority is in command of the economy also known as a centrally planned economy.
 * A market based economic system is a limited government which is called a mixed economy.

Ch 2.2 Ch 2.3 Ch. 2.4
 * A market is an arrangement that allows buyers and sellers to exchange things.
 * No one creates their own gear so they are not individually self sufficient. We need specialization so that each person may concentrate on what they are best at and we can all benefit.
 * Specialization is the concentration of the productive efforts of individuals and firms on a limited number of activities.
 * Economic systems that are based on voluntary exchanges in markets are called free economies.
 * In a free market economy, individuals and businesses use markets to exchange money and products.
 * A household is a person or group of people living in the same residence.
 * A firm is an organization that uses resources to produce a product, which it then sells.
 * A market in which firms purchase the factors of production from households is called a factor market. Owners also borrow money from households to purchase capital by paying them interest or profits on return. Profit is the financial gain made in a transaction.
 * The market in which households purchase the goods and services that firms produce is called a product market.
 * Self-interest is viewed as one’s own personal gain.
 * Incentive is an expectation that encourages people to behave in a certain way.
 * Competition the struggle among producers for the dollars of consumers.
 * Adam smith was a man who named the phenomenon, “the invisible hand,” this term is used to describe the self regulation nature of the marketplace.
 * Consumer sovereignty is the power of consumers to decide what gets produced.
 * In a centrally planned economy the government owns both the land and capital and in a sense it labors to, by controlling where individuals work and what wages they are paid.
 * The words mostly related to centrally planned economy is socialism and economy.
 * Socialism is a social and political and philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout society.
 * Communism is a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government.
 * Authoritarian is requiring strict obedience to an authority, such as a dictator.
 * A large farm leased from the state to groups of peasant farmers.
 * Under a soviet agricultural employment the government established quotas and distribution. Individuals had few incentives to produce more or better crops.
 * Heavy industry is the industry that requires a large capital investment and that produces items used in other industries.
 * Many areas of the world, especially less developed in countries, have experimented with centrally planned economies, but, most of these nations have moved toward mixed economies over the past twenty years.
 * A workers wages were not worth much because consumer goods were scarce and usually of poor quality.
 * Manufactures had the incentive to focus on quality, not quantity.
 * Adam smith and other early free market philosophers believed that, left to its own devices, the free market system would provide the greatest benefit for consumers and raise the standard of living.
 * Laissez fair is the doctrine that states that government generally should not intervene in the market place.
 * Private property is a property that is owned by individuals or companies, not by the government or the people as a whole.
 * The framers of the constitution ensured that the United States government would protect this fundamental right.
 * A society must assess its values and prioritize its economic goals.
 * Some goals are better met by the open market and others are better met by government action.
 * Free enterprise is an economic system characterized by private or corporate ownership of capital goods.
 * Investments that are determined by private decision rather than by sate control, and determined in a free market.
 * Continuum is a range with no clear divisions.
 * Transition is a period of change in which an economy toward a market based system.
 * Privatize is to sell state run firms to individualize.
 * The banking industry operates under relatively few restrictions and foreign owned banks have few additional restrictions.