Introduction to Economics

By command economy experts the command economy

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Unformatted text preview: he command economy discourages individualistic profit motives and consumeristic needs. Under such a planned system, rewards, wages, and perks are disbursed based on the social value of the service performed. Certain sectors of the command economy get preferential allocation at the expense of others, which may lead to allocation shortages in some essential goods. Absence of profit motives in a command economy precludes any need for competitiveness. This acts as a disincentive in individual contribution to collective efforts. Short-term advantages of a command economy contribute to its long-term failure. In the 20th century, the former Soviet Union was an example of a command economy. China and India used to also have a command economy. Today, countries using command economy are rare, remaining examples of countries with a command economy include Cuba and North Korea. economy Mixed Economy Mixed A "mixed" economy is a mix between "mixed" Command and Market economy. It is a hodgepodge of freedoms and regulations, constantly changing because of the lack of principles involved. A mixed-economy is a sign of intellectual chaos. It is the attempt to gain the advantages of freedom without government having to give up its power. government Wants (Ends) In economics, a want is something that is desired. It is said that people have unlimited wants, but limited resources. Thus, people cannot have everything they want and must look for the best alternatives which they can afford. Wants are often distinguished from needs. A need is something that is necessary for survival (such as food and shelter), whereas a want is simply something that a person would like to have. Some economists have rejected this distinction and maintain that all of these are simply wants, with varying levels of importance. By this viewpoint, wants and needs can be understood as examples of the overall concept of demand. examples Utility is the word used to describe the pleasure or Utility satisfaction or benefit derived by a person from consuming goods. consuming Scarcity of Resources Scarcity Scarcity of resources refers to the limitations in fulfilling each and every want of a person because of deficiency of resources needed to fulfill a want. of “The basic economic problem which arises from The people having unlimited people wants while there are and always will be limited wants resources. Because of resources. scarcity, various economic decisions must be made scarcity, to allocate resources to efficiently.” If there were no limitation or scarcity of resources then no economic problem would have arisen. no Microeconomics (Price Theory) (Price Pros. Microeconomics helps in the formulation of Pros. economic policies calculated to promote efficiency in production and welfare of the masses. masses. 1. It tells us how the prices and the factors of 1. production are to be determined. production 2. Helps in making an individual economy 2. efficient. efficient. 3. Micro-economy reveals how...
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This note was uploaded on 09/19/2013 for the course BUSINESS 1 taught by Professor Bostick during the Fall '12 term at University of Texas.

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