Module 1: Economic Systems in Canada and the United States
Section 1: Market and Mixed Economies
Lesson 2 - Page 5: Market Economy (ch 6)
Lesson Summary
In this lesson you answered this question: What does scarcity mean to me, and how do the economic systems of Canada and of the United States differ in answering the basic question of scarcity?
Scarcity is caused by unlimited wants and limited resources. The factors of production (land, labour, and capital) create scarcity. In order to solve scarcity, the three basic economic questions are asked: What goods should be produced? How should these goods be produced? For whom should the goods be produced?
Supply and demand are affected by the price of products, the availability of products, and the labour connected to creating the products. The consumer and the producer influence supply and demand. It is the role of the producer to reach an equilibrium point where the supply of the product meets the demand of the product at a price the consumer will pay to buy the product.
Market economies completely rely on supply and demand and competition in economic decision making. In a mixed economy, however, the decision making is sometimes affected by the public sector; for example, health care. This may reduce the concern of supply and demand for certain products.
In the next lesson you will examine more thoroughly government involvement in the economies of Canada and of the United States.
In this lesson you answered this question: What does scarcity mean to me, and how do the economic systems of Canada and of the United States differ in answering the basic question of scarcity?
Scarcity is caused by unlimited wants and limited resources. The factors of production (land, labour, and capital) create scarcity. In order to solve scarcity, the three basic economic questions are asked: What goods should be produced? How should these goods be produced? For whom should the goods be produced?
Supply and demand are affected by the price of products, the availability of products, and the labour connected to creating the products. The consumer and the producer influence supply and demand. It is the role of the producer to reach an equilibrium point where the supply of the product meets the demand of the product at a price the consumer will pay to buy the product.
Market economies completely rely on supply and demand and competition in economic decision making. In a mixed economy, however, the decision making is sometimes affected by the public sector; for example, health care. This may reduce the concern of supply and demand for certain products.
In the next lesson you will examine more thoroughly government involvement in the economies of Canada and of the United States.