January 24, 2014
Week 2 Journal Entry
Topics covered in week 2 of Survey of Economics included: specialization and why it leads to a higher standard of living, why the United States economy cannot be considered as a pure market capitalist economy, how self-interest helps to achieve society's economic goals, the contrast of how a market system and a command economy try to cope with economic scarcity, and why private property and the protection of property rights is so critical to the success of the market system. Relative to the topics discussed are important vocabulary terms such as command system, market system, specialization, consumer sovereignty, and “invisible hand”.
Specialization is a method of production in which each person concentrates on a limited number of productive activities, rather than a full range of goods and services. Specialization allows for a higher standard of living because neither time nor money is wasted in the production of a good that one does not efficiently produce. This is how the division of labor comes into play. Specialization increases the total output society derives from limited resources.
, in a pure market capitalist economy, the government has a very limited role. This is not so for the United States. Our government plays a major role in the economy by providing rules for economic activity, promoting economic stability and growth, and providing certain goods and services that would otherwise be under produced or not produced at all, and modifying the distribution of income. The way the U.S. economy operates challenges the definition of a pure market capitalist economy.
In the market system, self-interest is the motivating force of the various economic units as they express their free choices. Self-interest helps achieve society's economic goals because each economic unit tries to achieve its own particular goal, usually requiring the delivery of something of value to others. There is a wide variety of desired goods...