Economic Review

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Economics Review

List and describe the classification of economic systems based on allocation mechanisms * Traditional economy- you do what your parents do * ex: India in a way because of the caste system * Market economy- based on supply and demand, prices * Command economy- based on the government * Markets need homogenous goods, no barriers to entry or exit, perfect information and many buyers and sellers problem is that this is not the case, markets are not perfect

List and describe the classification of economic systems based on forms of ownership * Capitalism- people privately own inputs (land, labor, capital) and will use them in their best interests more production more goods and services * Socialism- deals with ownership instead of allocation, distribution based on how much you work, etc., want to be more equal but isn’t efficient because government doesn’t work in same interest as private

List and describe the classification of economic systems based on income redistribution and safety nets * Free markets * Maximum criterion- society equalizes everyone’s income, reciprocity- don’t know what will happen tomorrow * Pure communism- government distributes/allocates goods and services * Social safety nets (social market economies)- Germany-very large percent of income goes to taxes free healthcare with good quality * socialism- ownership of goods and services, communism—how goods and services are distributed
List and describe the characteristics of perfectly competitive markets * homogenous goods * m any buyers and sellers * no barrier to entry or exit * perfect information
Why is it argued that competitive markets are efficient? What does efficiency mean? * Competitive markets are efficient because they allocate resources according to the demand (and supply) of citizens *…...

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