Adam Smiths Invisible Hand

Page 41 questions 2-5, 7 and 9 2) Honoring tradition, because Traditional Economies are based on customs and beliefs of its people, aka cultural things, which is often a tradition. 3) Economic decisions in a command economy are made from government officials considering the resources and needs of the country and distribute resources based on their judgment. 4) Consumers can spend their money as they want; producers decide what goods or services they’ll offer. 5) Adam Smith’s “invisible hand” does function in both traditional economies and command economies, too.

In traditional economies they base everything on survival. To survive, you must think about yourself but more so about your peers to make sure you all produce and consume what you need. In command economies, the government distributes based on their judgments but still after considering what the people need. 7) Well defined economic roles and goals can be a strength in a traditional economy because there isn’t much disagreement going on about it. It can also be a weakness because people may not be able to get the role they desire due to their beliefs. ) I believe this is a traditional economy because in a traditional economy, tradition sort of assigns their jobs to them and by belief they can’t change this. Producers have to use materials as custom says, so they may not be able to use them as they would like to. And since they go by tradition, people can’t really change or have any say in the basic economy questions, or how they’re answered. Page 47 questions 2-5, 9 2) So they can provide for everyone. 3) Leaders can use the nation’s resources to produce items that may not make money in a market economy and even the sick or old who aren’t productive economically are provided for. ) Prices are below what they could be worth, and leaders are more unaware of local conditions, making their decisions wrong. The leaders are paged no matter their output. No private property makes people want to use resources wrong more. 5) The state rules the individuals every move. 9) Page 57 Questions 2-5, 7, 9 2) Private property, specialization, consumer sovereignty, competition, government involvement, voluntary exchange, profit. 3) People free to make their own economic choices, people are free to develop interests and talents they like. Profit. ) No mechanism for providing public goods and services, cannot provide security to those who cant be productive. 5) Efficiency serves as a reward for hard work and innovation, and if they were inefficient with distributing resources, they would make less profit. 7) What payments they pay to the factor market are sent as income from resources to the households who pay consumer spending to the product market which sends business revenue right back to businesses. 9) The government in this economy can try to help provide for those who can’t be productive and try to do some public services and offer goods.

Page 63 questions 2-5, 8-9 2) A market driven mixed economy is an economy where the people want a mixture of command economies and market. France is one of these, their economy emphasized the command system in years following WW2, in the 80’s they witnessed the dissatisfaction with performance of the gov’t. So the French lowered the command role. 3) 4) 5) 8) 9) #1: The producer should be able to decide how many of the digital cameras or of everything else to produce. Because he is producing that good, he should be able to decide who to make it for, as well. #2:

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