Economies in Transition?

An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic... show more An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic systems can be categorized into traditional, command (socialist), or market (capitalist) systems. In reality, most nations have "mixed" economic systems, containing elements of all three.

1.1. Fill in the blank for the following statement.

________ determine(s) what to produce, how to produce, and for whom to produce in a traditional economy.




A. The interaction of supply and demand

B. Buyers and sellers

C. Cultural customs

D. The invisible hand

E. A dictator or group of central planners




An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic systems can be categorized into traditional, command (socialist), or market (capitalist) systems. In reality, most nations have "mixed" economic systems, containing elements of all three.

1. Which of the following describe a command economy?

I. The government (democratically elected, ruling party, or dictatorship) acts as a central authority that answers the fundamental economic questions.

II. A nation's natural resources, industries, and businesses are owned and operated by the government or central authority on behalf of society.

III. The government or central authority is responsible for providing economic security and equity for all of a nation's citizens.




A. I and III only

B. I and II only

C. I only

D. I, II, and III

E. II and III only





An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic systems can be categorized into traditional, command (socialist), or market (capitalist) systems. In reality, most nations have "mixed" economic systems, containing elements of all three.

2. A command economy in which the government or a central authority owns and operates the nation's natural resources and major industries such as power plants, banks, and airlines, but allows individuals to own farms and businesses is called:




A. Communism

B. None of these

C. Capitalism

D. Socialism


An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic systems can be categorized into traditional, command (socialist), or market (capitalist) systems. In reality, most nations have "mixed" economic systems, containing elements of all three.

3.1. William owns a giant lemon farm. Local lemon farmers are excluded from trespassing on his farm, and he is excluded from trespassing on their farms. William sells lemons to the highest bidders, and he can refuse to sell lemons to anyone (even the government).

William lives in a ____ economy.




A. Capitalist

B. Socialist



An economic system is the way a society or nation chooses to allocate scarce resources by answering the three fundamental economic questions: What to produce? How to produce? For whom to produce? An economic system is also defined by who owns the means of production (land, labor, and capital). Typically, economic systems can be categorized into traditional, command (socialist), or market (capitalist) systems. In reality, most nations have "mixed" economic systems, containing elements of all three.

3.2. True or False: A market economy very efficiently determines what to produce, how to produce, and for whom to produce because consumers and producers act in the public interest out of a sense of duty.




True

False


3.3.The "invisible hand" is a belief that ____.




A. A democratic political system will lead to the best allocation of resources for production and consumption

B. Society is served best when producers and consumers are free to pursue their self-interests

C. People's innate altruism, desire to cooperate and look out for each other, are necessary for a successful economy


4.
Which of the following are considered potential flaws, weaknesses, or side effects of capitalism?

I. Pollution is not always directly accounted for in a free market system.
II. Income inequalities create social classes of rich pe
1 answer