UNIT 2-Econ Systems

Natural Resources used in the production of goods or services

Often results in shortages and surpluses

Sometimes called the free enterprise

Government stays out of economic matters

Tends to remain stagnant and resistant to change

Producers can produce according to supply and demand but must follow government regulations

Associated with Karl Marx

Government steps in occasionally to make competition more fair

Citizens have very little freedom and no private property

Assembly line, manual labor, & technology are examples if this.

Any tools or machines that assist in the production of goods and services

Role of consumer is very limited

Government determines what will be produced and who will produce it

Point on the PPC shows

Run by the "invisible" hand

Time or effort use in the production of goods and services

Often associated with communism

People have very little incentive to efficient or innovative

Competition and profit drive everything

Most countries including the US, have this type of the system

Also known as centrally planned economy

Can lead to unfair business practices

Associated with Adam Smith

Producers produce products according to supply and demand

Point outside the PPC shows

Government steps in when it needs to regulate certain aspects of the economy

Consumers are free to buy whatever they choose

Point inside the PPC shows

Mechanic is an example of...

Mostly flexible with some government intervention

First in line, highest bidder, & need are examples of this.

Associated with laissez faire ("hands off")