2.9

Question 1

define market economic system

Answer 1

a system with prices that are based on the competition between the private sector businesses, markets are not controlled by the government

Question 2

what is the private sector

Answer 2

the part of the economy made up of individuals and privately owned businesses that make economic decisions

Question 3

what is a public sector

Answer 3

the part of the economy that is under control of the government

Question 3

what are the characteristics of market economy

Answer 3

• many buyers and sellers
• buyers seek maximum satisfaction from consuming the goods and services they buy
• sellers want to maximise profit

Question 4

what are the advantages of the market economic system

Answer 4

• increased consumer choice
• competition leads to efficiency
• incentives to work

Question 5

what are the disadvantages of the market economic system

Answer 5

• some goods will not be provided at all or not in sufficient quantity
• income and wealth inequalities
• environmental issues
• wasteful competition