Define the term market system.
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Define the term market system.
A market system is an economic system where demand and supply (the price mechanism) determine what to produce, how to produce it, and for whom the goods and services are produced.
What is a mixed economy?
A mixed economy is an economic system where demand, supply, and the government determine what to produce, how to produce it, and for whom the goods and services are produced.
Define the term planned economy.
A planned economy is an economic system where the government determines what to produce, how to produce it, and for whom the goods and services are produced.
What does the term price mechanism mean?
The price mechanism is the interaction of demand and supply in a free market. It determines prices and allocates scarce resources.
Define the term market equilibrium.
Market equilibrium is the situation where demand equals supply, and the price at this point is called the market clearing price.
What is disequilibrium?
Disequilibrium occurs whenever there is excess demand or supply in a market.
True or False?
A pure market system has no government intervention.
True.
In a pure market system, there is no government intervention in the form of taxes or government spending.
Define the term opportunity cost.
Opportunity cost is the loss of the next best alternative when making a decision.
What does the term goods mean?
Goods are physical objects that can be touched (tangible), e.g. a mobile phone.
Define the term services.
Services are activities that one person performs for another (intangible), e.g. a manicure or car wash.