Unit Two

13 cards·by via3000

Gives individuals and businesses control of the economy

capitalism

gives the government control of the economy

socialism

father of capitalism

Adam Smith

father of socialism

Karl Marx

Individuals try to maximize thier own worth, and by doing so, through trade and entrepreneurship, society as a whole is better off

invisible hand

when the market fails to fix problems it has created because there is no incentive to do so

Market Failure

Roles of government in market economy

prevent market failures, redistributes income, provide public goods and services

many sellers, who have products in which they are pretty much the same. Easy to start up in eachseller has no control over the market price

perfect competition

Contains many sellers, who have products that are slightly different. Easy to start in and each seller has some control over the market pric

monopolistic competition

Contains few sellers, who have products which are moderately different. It is pretty hard to join, each seller has high control over market

oligopoly

Owned and operated by one person, easy to start, unlimited liability

sole proprietorship

owned and operated by a few ppl, division of labor to split up work, split liability

partnership

owned by stockholders and operated by a CEO, owners less responsible, makes money by selling stock

corporation