Economics: Chapter 2 : Economic Systems
Define the following terms on a separate piece of paper and give an example of each
term.
Competition
Socialism
Mixed economy
Self-interest
Command economy
Laissez-faire
Privatize
Consumer sovereignty
Market economy
Complete the following graphic organizer showing the advantages and values of a mixed
economy
Mixed Economy
Economic
Security:
Disaster Relief
1. Consider the General Motors Assembly plant in Arlington; Describe the operation
in terms of factor markets and product markets.
2. How is a factory assembly line an example of specialization?
3. Why are there no pure free market economies in the world?
Market Economy Circular Flow Diagram
Mixed Economy Circular Flow Diagram
4. Compare the circular flow diagrams for a market economy and a mixed economy.
Describe how they differ and why.
5. What are the advantages and disadvantages of both a free market economy and a
centrally planned economy. Assess how each system values economic freedom
and economic equity.
Continuum of Mixed Economies
Place the following countries on the continuum below: Hong Kong, Singapore, United
States, United Kingdom, Canada, France, Greece, China, Russia, Cuba, Iran and North
Korea.
Centrally Planned
6. How can you explain China’ position on the continuum? Why is Hong Kong (a part
of China) in a much different position on this diagram?
Free Market
Reading a Flow Chart
There is a yard sale this weekend in Megan’s
neighborhood.
Megan wants to make extra money this weekend.
Megan sets up a stand at the yard sale offering her
homemade gourmet cookies for sale.
Neighbors buy cookies from Megan
Neighbors do not buy any cookies form Megan.
Megan decides to open her cookie stand next time a
neighbor has a yard sale.
7. What does Megan do to try to make some extra money for the weekend?
8. Why does the flowchart split into two paths after Megan sets up her stand?
9. What step does Megan take is the neighbors like her cookies?
10. If the neighbors don’t like her cookies, where could a step or steps be added so
that Megan could succeed next time?
11. What kinds of economic decisions will Megan consider before she sets up her
cookie stand?