Economics Block 1 Chapter 2 Summary
LO2.1 differentiate between laissez-faire capitalism, the cmmmand system, and the market
system
Economic system
A set of insttutonal arrangements an a coor inatng mechanism
o Who owns the factors of pro ucton
o Metho use to motiate coor inate an irect economic actiity
Differences in systems e#ist yy
o Decentralize use of markets an prices in ecision-making
o Degree of centralize goiernment control use or ers an man ates
Laissez-faire capitalism (let it be economy)
Pure capitalism
Goiernment woul not interiene with the economy self-correctng
Power of goiernment just nee e to
o Protect priiate property from thef
o Proii e a legal eniironment for contracts enforcement
People interact in markets to yuy an sell
Pmlmr pmsitimn mf laissez-faire is cmmmend system
The command system
Known as socialism or communism
Goiernment owns most resources
what, how much an the price are etermine yy the central planning yoar
some mainly communist countries North Korea, Cuya an Myanmar
The market system
a mi# of ecentralize ecision making with some goiernment control
resources are owne yy priiate in iii uals an insttutons
markets an prices coor inate irect economic actiity
each partcipant acts their own self-interest
monetary rewar s are possiyle yut with fnancial risk
LO2.2 list the main characteristcs of the market system
Characteristics of the market system:
priiate property
free om of enterprise
free om of choice
self-interest
competton
market an price
, Economics Block 1 Chapter 2 Summary
index of economic freedom
measures economic free om
using 10 major groups free oms
o tra e policy, property rights an goiernment
interienton
each category contains 50 specifc criteria
ranke 179 economies accor ing to their economic free om
Technology and capital goods
market system rewar in iii uals an yusinesses for
eielopment of new technologies
specializaton
o economies take more a iantage of their resources
o iiision of layour or human increases the pro uctiity
making use of efences in ayilites, fostering learning yy oing
o Geographic specializaton can ye regional or internatonal
LO2.1 differentiate between laissez-faire capitalism, the cmmmand system, and the market
system
Economic system
A set of insttutonal arrangements an a coor inatng mechanism
o Who owns the factors of pro ucton
o Metho use to motiate coor inate an irect economic actiity
Differences in systems e#ist yy
o Decentralize use of markets an prices in ecision-making
o Degree of centralize goiernment control use or ers an man ates
Laissez-faire capitalism (let it be economy)
Pure capitalism
Goiernment woul not interiene with the economy self-correctng
Power of goiernment just nee e to
o Protect priiate property from thef
o Proii e a legal eniironment for contracts enforcement
People interact in markets to yuy an sell
Pmlmr pmsitimn mf laissez-faire is cmmmend system
The command system
Known as socialism or communism
Goiernment owns most resources
what, how much an the price are etermine yy the central planning yoar
some mainly communist countries North Korea, Cuya an Myanmar
The market system
a mi# of ecentralize ecision making with some goiernment control
resources are owne yy priiate in iii uals an insttutons
markets an prices coor inate irect economic actiity
each partcipant acts their own self-interest
monetary rewar s are possiyle yut with fnancial risk
LO2.2 list the main characteristcs of the market system
Characteristics of the market system:
priiate property
free om of enterprise
free om of choice
self-interest
competton
market an price
, Economics Block 1 Chapter 2 Summary
index of economic freedom
measures economic free om
using 10 major groups free oms
o tra e policy, property rights an goiernment
interienton
each category contains 50 specifc criteria
ranke 179 economies accor ing to their economic free om
Technology and capital goods
market system rewar in iii uals an yusinesses for
eielopment of new technologies
specializaton
o economies take more a iantage of their resources
o iiision of layour or human increases the pro uctiity
making use of efences in ayilites, fostering learning yy oing
o Geographic specializaton can ye regional or internatonal
