The Market System

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The Market System

• Chapter 4

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I. Characteristics of the Market System

• A. Private Individuals own Factors
• B. Freedom of Enterprise and Choice
• Consumer Sovereignty
• C. Self-interest
• D. Competition
• E. Markets and Prices
• F. Reliance on Technology and Capital Goods
• G. Specialization
• H. Use of Money as a Medium of Exchange
• I. Active, but Limited Government

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II. The Market System at Work

• A. Producers and Buyers Make Voluntary
  Transactions
• B. What will be Produced?
• Allocative Efficiency
• Acounting, Normal, and Economic Profits
• Consumer Sovereignty
• C. How will the Goods be Produced?
• Productive Efficiency
• D. Who will get the Goods and Services?
• E. How will the System Accommodate Change?
• The guiding function of prices.

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III. Competition and the Invisible Hand

• A. Competition is the mechanism of control.
• B. Promotion of public interest through
  self-interest