The main goals of this chapter are to: Differentiate between a command system and a market system; list the main characteristics of the market system; explain how the market system decides what to produce, how to produce it, and who obtains it; discuss how the market system adjusts to change and promotes progress; describe the mechanics of the circular flow model.
Trang 1The Market System and the Circular Flow 02
Trang 2Private property Freedom of enterprise and choice Self-Interest
Competition Markets and prices
Trang 3Index of Economic
Freedom,
Selected Nations
Trang 4goods are encouraged
Trang 5alleviate market failures
effectiveness of a market system
Trang 6produced?
produced?
change?
progress?
Trang 7profit
which goods will be produced
industries survive or fail
Trang 8the most efficient techniques
Trang 9willingness to pay will get the product
Trang 10How Will the System Change?
Trang 11How Will the System Promote Progress?
Trang 12Smith
Trang 13China
Trang 14RESOURCE MARKET
•Households sell
•Businesses buy
PRODUCT MARKET
•Businesses sell
•Households buy
BUSINESSES
• buy resources
• sell products
HOUSEHOLDS
• sell resources
• buy products
Trang 15Businesses