I. Economic Systems Show II. Capitalist Ideology A. Basic Characteristics:
B. private property
C. markets and prices
D. role of self interest
E. freedom of enterprise and choice
F. competition = capitalism
G. limited role for government
III. The Market System at Work A. The Market and the 5Es 1. Economic Growtha. Define B. Summary: 1. The move toward capitalism has resulted in high rates of ECONOMIC GROWTH in many countries. Profits, private property, and freedom of enterprise and choice promote growth A. Introduction 1. The five fundamental questions must be answered by all economic systems. B. What will be produced? (Allocative Efficiency) 1. In order to be profitable, businesses must respond to consumers' (individuals, other businesses, and the government) wants and desires. C. How will the goods and services be produced? (Productive Efficiency) 1. The market system encourages and rewards those producers who are achieving least-cost production. D. Who will get the output? (Equity) 1. determined by how the income is distributed E. How will the system accommodate change? 1. Markets are dynamic - what is efficient today may not be efficient tomorrow as tastes, technology, and resource supplies change. F. How will the system promote progress? 1. The market system promotes technological improvements and capital accumulation (economic growth). What are the weak points or economic costs that are part of a free enterprise economy quizlet?Step 1. The weaknesses or costs of a free market economy are the following: Uneven Economic Growth: \textbf{Uneven Economic Growth:} Uneven Economic Growth: capitalist economies will always present economic boom cycles and recessive cycles that, although the economy is contracting, serves to correct market failures.
What were the three main disadvantages of free enterprise?Disadvantages Of A Free Market Economy. Poor Quality. Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically. ... . Merit Goods. Goods and services that are not profitable will not be produced or run. ... . Excessive Power of Firms. ... . Unemployment and Inequality.. What are the pros and cons of a free enterprise economic system?The lack of government control allows free market economies a wide range of freedoms, but these also come with some distinct drawbacks.. Advantage: Absence of Red Tape. ... . Advantage: Freedom to Innovate. ... . Advantage: Customers Drive Choices. ... . Disadvantage: Limited Product Ranges. ... . Disadvantage: Dangers of Profit Motive.. What can be a problem in a free enterprise system?The problems arise when the two main aspects of free enterprise, supply and demand, create situations that financially exploit consumers and producers. The problems also affect the economy as a whole, resulting in recession, inflation and unemployment.
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