Ch3 Practice

Ch3 Practice - Ch. 3 Practice 1. Capitalism is an economic...

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Ch. 3 Practice 1. Capitalism is an economic system based on private ownership of resources, and relies on market forces to answer the What? How? and For whom? economic coordination problems. Socialism is characterized by government ownership of resources, and relies on government to answer the What? How? and For whom? economic coordination problems. Most real world economies are mixed economic systems. Capitalism's solution to the "What to produce?" economic coordination problem is what businesses believe people want, and is profitable . Capitalism's solution to the "How to produce?" economic coordination problem is what businesses decide is most efficient, guided by their desire to make a profit . Capitalism's solution to the "For whom to produce?" economic coordination problem is distribution determined by individuals' ability to pay . Socialism's solution to the "What to produce?" economic coordination problem is what central planners believe is socially beneficial . Socialism's solution to the "How to produce?" economic coordination problem is what central planners decide, based on what they think is good for the country . Socialism's solution to the "For whom to produce?" economic coordination problem is distribution determined by central planners based on what they determine are individuals' needs . 2. Capitalism and Socialism have not existed forever. Capitalism came into widespread existence in the mid- 1700s ; socialism came into existence in the early 1900s . Before capitalism and socialism, other forms of economic systems existed. An economic system in which traditions rule is called feudalism , and dominated the western world from about the 8 th century to the 15 th century. An economic system in which government determines the what, how, and for whom decisions by doling out the rights to undertake certain economic activities is called mercantilism and remained the dominate economic system until the 1700s.
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3. Each of the following questions refers to the three forms of business organizations. a. Which type of business organization is the most common (in terms of numbers) in the United States? The greatest numbers of firms are sole proprietorships (followed by corporations and then partnerships). b. Which type of business organization has the greatest number of sales receipts in the United States? Corporations
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Ch3 Practice - Ch. 3 Practice 1. Capitalism is an economic...

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