McConnell_Brue_Chapter02

The market system the market system is characterized

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Unformatted text preview: em The market system is characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity. The core motivator within the market system is selfinterested behavior. All parties in the system are free to make choices perceived to be in their own best interest. The process is self-sustaining (almost always) by individuals acting in their own self-interest. Chapter 2 8 Learning Objective 2-2 Slide 9 How does a market system differ from a command system? Market systems allow for private ownership of capital goods. • Communication to answer the questions about production (what to produce, what to use to produce it, and who gets it) is facilitated through price in the market. • Competition and the potential for profit provide very efficient processes to facilitate the functions of market systems automatically. Chapter 2 Learning Objective 2-2 9 Market systems and command systems differ in both the way resources are allocated, and also how decisions are made regarding distribution of the goods. The market process a...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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