1. Chapter 2 Mr. Bertrandt

2. There are 5 characteristics of a Market System. 1. Economic Freedom 2. Economic Incentive 3. Competitive Markets (Competition) 4. Limited Government 5. Private and Public Property

3.  When consumers, producers and workers are free to make economic choices that are in their own best interest.

4.  In a Market economy there are 3 economic actors or groups that interact with one another. 1. Consumers 2. Workers 3. Producers

5.  What to buy?  Where to shop?  What prices to pay?

6.  Where to work?  What kind of job to do?  What wage to accept?

7.  What to make?  What resources to use?  What to charge?  Who to hire?

8.  Even in a Market economy there can be restrictions on the economic actors.  Restrictions on Consumers - Limited quantities for items, must be a certain age to make purchases, prices too high, stores not open.

9.  Not qualified for good jobs (skills/education)  Minimum wage  Amount of hours that can be worked  Type of jobs

10.  Quotas on resources  Minimum wage  Environmental restrictions  Diversity in the workplace

11.  Positive or negative rewards or punishments for economic choices.

12.  Sales  Giveaways  Promotions

13.  Wage increases  Paid vacations  Benefits  Bonuses

14.  Profits  Good Reputation  Logo/Name Recognition

15.  High Prices  Lack of Variety  Sizes  Styles

16.  Unemployment  Poor Working Conditions  Long hours

17.  Governmental Regulations  Increase Cost of Resources

18.  When two or more companies produce the same good or service and vie for consumer dollars.

19. 1. Wider Variety, colors, sizes, styles 2. High Quality 3. Good Prices 4. Good Service

20. What are some examples of competitive markets?  Automobile  Beverage  Fast Food

21. Examples of Markets with No Competition:  Public Utilities  Cable Television  Post Office

22. What is meant by a voluntary exchange?  When two people feel they will benefit from a transaction.

23. Private Ownership  When individuals are able to possess goods and services.  Examples of Private Property  House  Car  Boat  Clothes  Ipod  Computer

24. What are some restrictions we have as property owners in our economy?  Building permits  Noise Restrictions  Obeying Laws

25. Public Ownership  Property that is owned by everyone and is financed by taxes but is managed by a selected group of the government.  Examples of Public Property  Streets  Parks  Courthouse  Library

27. What is the role of Limited Government in a pure market economy?  To provide structure for business to operate.

28. What are the 3 functions of government in a pure market economy? 1. Establish the Laws – Legislative 2. Enforce the Laws – Executive 3. Settle Disputes – Judicial

29. In what areas of the American Economy does our government exert some economic control?  Taxation – Social Security, Property, Income  Health and Safety Standards – OSHA, FDA  Public Protection – Police, Fire, Military