Chapter 4.1 note

Chapter 4.1 note - Chapter 4.1 The Market System 1 Private...

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1 1 Chapter 4.1 The Market System 2 Private vs. Public Sectors • The private sector is made up of households, businesses, and the international sector. • The public sector refers to activity by the various levels of government. • Productive activity occurs in both sectors. A basic problem is determining which sector can best produce a given good or service. 3 The Market System • In the market system of the private sector, the consumer is supreme. • In contrast, in centrally planned economies, a government planning group decides what will and will not be produced. – In a centrally planned economy, there is a limited private sector and the market does not fully function.
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2 4 Consumer Sovereignty The authority of consumers to determine what is produced through their purchases of goods and services – dictates what goods and services will be produced. 5 Profit and the Allocation of Resources When a good or service seems to have the potential to generate a profit, someone
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Chapter 4.1 note - Chapter 4.1 The Market System 1 Private...

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