How does this happen defining terms 1 define a

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Unformatted text preview: x believed that capitalists, in pursuing their self-interests, actually exploited the workers. How does this happen? Defining Terms 1. Define: a. economic system b. free enterprise c. som d. traditional economy e. economic plan f. surplus value Marx argued in his labor theory of value that all value in produced goods comes from labor. The value of any item, he said, is determined by the necessary labor time needed to produce that item. For example, if it takes 5 hours of labor time to produce a chair and 10 hours to produce a table, then the table is twice as valuable as the chair. Marx believed that the owners of factories and businesses exploited the workers by paying them far less than they were worth. For example, suppose a worker produced $100 a day worth of value for the factory owner but was only paid $20. The difference between the total value of production ($100) and the wages paid to the worker ($20) is what Marx called surplus value ($80). According to Marx this surplus should go to the worker, but instead is stolen by the capitalist for himself. Ideas That Changed the World The ideas of both Smith and Marx have been with us for many years. Smith’s ideas compose much of the foundation upon which free enterprise rests, while Marx’s ideas provide much of the foundation for som Their ideas have changed the world, and will probably continue to have a major impact on the world for years to come. som as each relates to private property? 4. Are all mixed economies the same? Explain your answer. 5. What is Smith’s position on self-interest? 6. Explain Marx’s labor theory of value. Reviewing Facts and Concepts 40 Critical Thinking 2. What are the three economic questions every society must answer? 3. What is the difference between free enterprise (or capitalism) and 7. Why do you think that most economies are mixed economies instead of purely capitalist or purely sot economies? Chapter 2 Economic Systems and the Global Economy Applying Economic Concepts 8. Choose a current economic issue or policy measure and then contrast the way a proponent of capitalism would discuss it versus how a proponent of som would discuss it. 02 (030-053) EMC Chap 02 11/17/05 4:13 PM Page 41 Focus Questions What is globalization? What are the causes of globalization? What evidence indicates that globalization is taking place? What are the benefits of globalization? What are the costs of globalization? Is the trend toward globalization likely to continue? Globalization Key Terms globalization offshoring What Is Globalization? From the 1950s through the 1980s, it was common to hear people talk about a capitalist or free enterprise country, and about a sot or communist country. It was as if each country in the world was definitely one or the other. It was also the case that for the most part these countries only associated (politically and economically) with their “own kind.” Things have changed. Few countries can be easily labeled “ca...
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This document was uploaded on 01/16/2014.

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