ExamWrittenStuffRecker - Exam 1 2 Describe the...

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Exam 1 2. Describe the characteristics of a capitalist economy. Explain the differences between capitalism and socialism. Capitalism is a system of economy that relies on the idea of private property ownership. Resources is this economy are controlled by individuals who can use these resources in any way they wish. Supporters of this economic system believe that the profit made from the goods and resources will yield efficiency. Socialism is an economic system in which the state owns a major share of the productive resources except for labor. 3. List an explain the fundamental economic questions that all societies must answer. What to produce, as far as goods and services, is the first question that is asked. Producers can produce goods and/or services. How should these goods and services be produced is the second question that societies must answer. This question involves opportunity cost. For example, if I utilize a certain resource to produce an item, what am I giving up? The process for producing a good depends on the opportunity costs of labor and capital. The third question is, who consumes these goods and services? This question concerns the method in which we organize society to meet wants and needs.
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