Blog Assignment #3

1. What are the three basic economic questions that every society (economic system) must answer?
  *What goods and services should be produced?
  *How should the goods and services be produced?
  * For whom should the goods and services be produced
2. What is an economic system? What are the four types of economic systems and how does each answer the three basic economic questions? Give one example of each. Set of principles and techniques by which a society decides and organizes the ownership and allocation of economic resources. At one extreme, usually called a free-enterprise system, all resources are privately owned. Market Economy, Command Economy, Mixed Economy, and Traditional Economy.In Traditional economy, the three economic questions are decided mainly by the social customs.Market economy is like capitalism in U.S and the economic questions are decided by individuals in the marketplace. Command economy, the questions are decided by the government. In Mixed economy,

3. Write a detailed explanation of how each of the four economic system answer the three basic question.
4. While the United States is largely a market economy, how does it also reflect a combination of economic systems. The US reflects a combination of economic systems because buyers/sellers do not make all the economic decisions. The government also plays a major role in making economic decisions. Because of the government involvement in the economy this would beb a characteristic of a command.
5. The Inuit tribe in Alaska teach their children that they must always do their best at every task. The child begins by observing the adults working on a task. When the time comes for the child to do the task, the task is first divided into smaller tasks. The adults praise the child at each stage the child successfully completes. When all stages have been complete, the child is ready takes full responsibility for the task. What economic system is used by the Inuit? Explain. Because the example describes how the Inuit tribe in Alaska teach children how to do specific tasks they are passing along customs and traditions of the tribe which are characteristic of a traditional economy.

6. How do market, command and traditional economics systems compare and contrast with each other in terms of profit motive, private ownership, consumer sovereignty, competition and government regulation?  Market and Command economies focus on profit while Traditional economies focus on providing for their people. In a Market economy there is alot of private ownership while in the Command economy the government owns everything and in a Traditional economy everyone owns the businesses. In a Market economy the consumer sovereignty regulates the supply and demand. Competition is a another factor that helps regulate a the Market economy.
7.Explain why Adam Smith would oppose government intervention in a market economy. Give a specific example of why you support Adam Smith’s theories of laissez faire and the ‘invisible hand’ in a market economy and one example of why you would oppose his theory? Explain. Adam Smith opposed monopolies in the market economy . He believed that the law of supply and demand and the law of competition would regulate a free market. Adam Smith’s theories of  laissez-faire described economics in terms of an "invisible hand" that regulates  market economy. This means that producers will supply what consumer need most.