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Economics Unit 4
Market Structure & Economic Systems
| Question | Answer |
|---|---|
| Market Economy | decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system. |
| Free Enterprise | an economic system in which private business operates in competition and largely free of state control. |
| Command Economy | an economy in which production, investment, prices, and incomes are determined centrally by a government. |
| Socialism | a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. |
| Communism | a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. |
| Capitalism | an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. |
| Free Market | an economic system in which prices are determined by unrestricted competition between privately owned businesses. |
| Mixed Market | An economic system that is both capitalism and socialism. A mixed economic system allows a level of private economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. |
| Competitive Market | A competitive market is one in which a large numbers of producers compete with each other to satisfy the wants and needs of a large number of consumers. |
| Voluntary Exchange | is the act of buyers and sellers freely and willingly engaging in market transactions. Moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred. |
| Incentives | a thing that motivates or encourages one to do something. |
| Traditional Economy | is an original economic system in which traditions, customs, and beliefs shape the goods and the products the society creates. Countries that use this type of economic system are often rural and farm-based. |
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