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chapter 2 study questions

chapter 2 study questions - Rahim Spencer ECON 201 Chapter...

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Rahim Spencer ECON 201 9/11/09 Chapter 2 Study Questions 1. The command system is a system in which the government owns most of the re- sources and property, and a central planning board decides how resources are used and allocated, their composition and distribution of output, and the organization of pro- duction. in the market system, the government’s role is very limited, and private owner- ship of resources and the use of markets and prices are used to coordinate and direct economic activity. 2. Self-interest helps to achieve market goals because it gives people the direction and consistency to what might otherwise be a chaotic economy. This is because the high potential monetary rewards create incentives that motivate entrepreneurs and firms to be more innovative, and to pioneer new products and processes. Achieving one’s own goals requires them to deliver something of value to others. 3. Private property and the protection of property rights is critical to the success of the market system because maintenance of property, and economic growth. Since people are not afraid the government will benefit from investment in property, people invest more. People also invent new products and ideas because their intellectual property is protected, so they are not afraid they will be stolen and others will reap the benefits from them. People also maintain their property more to preserve and increase their value be- cause.
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