This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
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141. An economic system is a set of organisational and institutional arrangements established to answer the basic economic problems of scarcity and choice. 142. The three main types of economic systems are capitalism, socialism, and mixed economy. 143. In a capitalist economy, the greater percentage of resources are owned and controlled by private individuals. 144. The main motive of production in a capitalist economy is to maximize profit. 145. Examples of countries that practise a capitalist economic system include USA and Canada. 146. In a socialist economy, the means of production are owned and controlled by the state (or government). 147. Examples of countries that practise a socialist economic system include Cuba and North Korea. 148. In a mixed economy, resources are partly owned by the state and partly owned by private individuals. 149. Ghana is an example of a mixed economy because both the private sector and government play significant roles. 150. A key feature of capitalism is consumer sovereignty, where consumers are free to make their own choices. 151. One disadvantage of capitalism is that it promotes unequal distribution of income, making the rich richer. 152. One advantage of socialism is that it avoids extreme disparities (or inequality) of income between the rich and the poor. 153. One disadvantage of socialism is the delay in decision making due to bureaucratic procedures. 154. In a mixed economy, prices of goods and services are generally determined by demand and supply, but government may interfere through price control. 155. The criteria used to classify economic systems include: ownership and management of resources, motive of production, how decisions are made, and the determination (or role) of prices. 156. In a socialist economy, full employment is achieved through planning (or central planning) done by the central committee. 157. Under capitalism, the consumer is the main factor that determines decisions, which are made through the market forces of demand and supply, also called the price mechanism. 158. One advantage of a mixed economy is that it combines the best of both the private and public sectors. 3 done, 2 left today. You're making progress.