Chapter 2 - The market system and the circular flow. This chapter begins with a brief comparison of the command and market systems, transitioning quickly to a discussion of the institutional framework of the American market system.
Trang 1Chapter 2
The Market System
and the Circular
Flow
Copyright © 2014 by The McGrawHill Companies, Inc. All rights reserved McGrawHill/Irwin
Trang 2coordinate, and direct economic activity
Trang 3remaining examples of largely
centrally planned economies
Trang 4LO1
North Korea South Korea
GDP $40 billion $1.3 trillion GDP per Capita $1800 $27,700 Exports $2.0 billion $355 billion Imports $3.5 billion $313 billion Agriculture as %
of GDP 23 percent 3 percent
The Two Koreas
24
Trang 5The Market System
Trang 7The Market System
Trang 8goods are encouraged
Trang 9Use of Money
Trang 10alleviate market failures
effectiveness of a market system
Trang 11progress?
Trang 12profit
which goods will be produced
industries survive or fail
Trang 13the most efficient techniques
Trang 14willingness to pay will get the product
Trang 16Smith
Trang 17China
shortage
Trang 18RESOURCE MARKET
•Households sell
•Businesses buy
PRODUCT MARKET
Trang 20LO5
Corporations (18%)
Sole Proprietorships
(72%)
Corporations (82%)
Partnerships (10%)
220
Trang 21The World’s 10 Largest Corporations
Trang 22LO5
Percentage of Earned Income
Percentage of Consumer
Expenditures
222