Econ - Wk 17 Flashcard

Front

What is the Market Mechanism?

Back

The Market Mechanism, also known as Spontaneous Order, is the process by which individual actions in a free market lead to the allocation of resources without central planning.

Front

Define socialism.

Back

Socialism is an economic system in which the state owns the means of production and distribution of goods.

Front

Why do workers need to join together?

Back

Workers must join together because there are many workers and few employers, giving employers the balance of power.

Front

What does the concept of diminishing returns imply?

Back

The concept of diminishing returns implies that as more resources are added to production, the additional output gained from those resources will eventually decrease without improvements in technology.

Front

What is Hayek's view on central planning?

Back

Hayek argues that any form of central planning leads to a totalitarian state because the more plans a government imposes, the more coercion is required to enforce them.

Front

What is the role of competition in a market economy?

Back

Competition in a market economy drives innovation, improves efficiency, and leads to better products and services for consumers.

Front

Explain the term 'means of production'.

Back

Means of production refers to the facilities and resources for producing goods, including factories, machinery, and raw materials.

Front

What is the difference between capitalism and socialism?

Back

Capitalism is an economic system where private individuals own the means of production, while socialism is where the state owns the means of production.

Front

What is the significance of property rights in economics?

Back

Property rights are crucial in economics as they provide individuals with the incentive to invest, innovate, and engage in economic activities.

Front

Define 'opportunity cost'.

Back

Opportunity cost is the value of the next best alternative that is forgone when making a decision.