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Fundamentals of Engineering Economic Analysis1st EditionDavid Besanko, Mark Shanley, Scott Schaefer 215 solutions As you can see, some form of distribution is necessary to divide up goods and services between people. You encounter distribution methods each day, including finding a seat on the bus or in a classroom, voting for Student Council positions, making a sports or arts team, finding a parking place, or buying food. There are limited items available and people find ways to distribute them—either on purpose or not. With any distribution method, there are people who receive what they want and others who do not. For example, the force method allows stronger people to receive the goods at the expense of weaker individuals. Or, the contest method gives goods and services to the "contest winners," while those who did not win do not receive them. Some of the distribution methods mentioned are used and may even work in certain situations throughout the world. But, countries still need a distribution method that works in the marketplace. They need a way to distribute large quantities of goods and services to millions of people every day. There are several systems that governments use to achieve this goal, including command and market systems. Command Systems Imagine It: What's it like to live in a command economy? Think about a life with little freedom. You have very little choice about what your job will be or where you will work or live. You have very little selection of goods and services. And these items may run out quickly—so there will be shortages of goods and services that you may need or want. Market Systems The method of distributing goods and services through prices exists in economies called "free market." In free market economies, both consumers and producers act in their own self-interests. Producers want to sell their goods and earn money. But, they can only do this if consumers are willing and able to buy their products. Consumers want to buy goods and services, but have preferences for certain kinds of products and the prices that they are willing to pay. There are also many places that consumers can purchase goods and services (think comparative shopping). So, producers compete for consumers by offering bigger selections and lower prices. This competition is good for consumers who often receive better products at lower prices. The cycle of consumer spending and business growth also makes the economy grow, which gives more people jobs. This type of economic system paired with America's political system that allow most industries to be controlled privately is called capitalism. America is a capitalistic society. Distributing goods and services through price has other advantages, such as efficiency. This is because consumers signal to the producers what they are willing to buy, and producers allocate their resources to make these products. How does this work? Think about your T-shirt business. At first, consumers were buying the T-shirts, and you allocated your resources towards making the shirts. But when people no longer bought the T-shirts, you used your resources to make towels instead. Think about it! What is a system in which production of goods and services is determined by the government?A command economy is an economic system in which the government, or the central planner, determines what goods and services should be produced, the supply that should be produced, and the price of goods and services.
In which type of economic system are the production of goods and services determined by the demand from consumers?A market economy is an economic system where two forces, known as supply and demand, direct the production of goods and services. Market economies are not controlled by a central authority (like a government) and are instead based on voluntary exchange.
What is a system of producing and distributing goods and services quizlet?Economy. A system of producing and distributing goods and services. Subsistence Economy. A type of economy in which human groups life off the land have little or no surplus.
What is a capitalistic system in which the production of goods and services is determined by demand from consumers?The production of goods and services under capitalism is based on supply and demand in the general market—known as a market economy—rather than through central planning—known as a planned economy or command economy. The purest form of capitalism is free market or laissez-faire capitalism.
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