Economic Systems Flashcards

Front

What is scarcity?

Back

Scarcity is the situation that exists when there are not enough resources to meet human wants.

Front

What is an economic system?

Back

An economic system is the way in which a society uses its scarce resources to satisfy its people’s unlimited wants.

Front

What are the three basic economic questions?

Back

1. What should be produced? 2. How should it be produced? 3. For whom will it be produced?

Front

What are the three main types of economic systems?

Back

1. Traditional economies 2. Command economies 3. Market economies

Front

What is a traditional economy?

Back

A traditional economy is an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs handed down from generation to generation.

Front

What is a command economy?

Back

A command economy is an economic system in which the government makes all economic decisions.

Front

What is a market economy?

Back

A market economy is an economic system in which individual choice and voluntary exchange direct economic decisions.

Front

What is the role of government in a command economy?

Back

The government decides what goods and services will be produced, how they will be produced, and how they will be distributed.

Front

What is the profit motive?

Back

The profit motive is the incentive for individuals and businesses to improve their material well-being by seeking to earn a profit.

Front

What is consumer sovereignty?

Back

Consumer sovereignty is the idea that consumers have the ultimate control over what is produced because they are free to buy what they want and reject what they do not want.