PAT9150-ABED_1: Activity 1 page 3

Unit 4: Section 1: Workbook 14: Market and Mixed Economies

What are the underlying principles of market economies?

Market economies are based on the following beliefs and values.

Individualism - Individuals can make the best decisions about how their needs and wants will be met.
Freedom -People should have the freedom to make their own economic decisions.
Competition - Individuals and businesses who offer the best goods and services at the best prices will survive in the marketplace.
Self-interest - People will make economic decisions that are the best for themselves.
Private ownership of the factors of production - Land, labour, and capital should be in the hands of individuals and privately-owned corporations.
Survival of the fittest - Those who do not succeed are eliminated from the marketplace.
Profit motive - Economic decisions are made with the goal of making profits.
No government intervention is best in the marketplace.

The keys or "pillars" of capitalism are

private ownership
profit motive
market

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In government, the political parties vary in their values and beliefs about the extent of government control.

The amount of government spending is determined by which political party is elected.

The United States economic system is founded on capitalism, where the goal is minimal government control and minimal spending on the economy. China's economic system, by contrast, is based on socialism, with more government control and more spending.

What are some examples of the economies and political structures in other countries? North Korea and Cuba, with communist political structures, are near the left end of the continuum. United States is closer to the right with a more capitalist political structure. Canada is between with moderate government support of the economy.