Econ 4-02 - Basic Questions / Functions of economic systems...

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Basic Questions / Functions of economic systems 1. What 2. How? 3. For when a. Distribution of goods/services b. Distribution of Income/wealth 4. Is it possible to impact upon the level and/or the Direction of associate econ activity. 5. Capitalism answers a. It’s possible for capitalism to experience process cycles i. It gets its ups and downs, but mainly goes up (why we follow capitalism) Flow Diagram of capitalist (market) econ system Product Market ------------- Firm ------ $ -------  Factor Market ---------- Ld, L, K, KN --------  Households Households – Seller in factor Market – Supplier of factors Product Market Factor Market Firm – Buyer in factor markets   demand or factors
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Factors Factors + Payments Symbols Ld Rent Rt L Wages w K Interest i or r Kn Profit Land, labor, capital, know how  = total revenue – total costs
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Econ 4-02 - Basic Questions / Functions of economic systems...

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