Page 74 - Business Principles and Management

Chapter 3 • Economic Environment of Business

the factors of production toward capital formation. Even Chinese leaders have
recognized the shortcomings of the system when it comes to meeting the needs
of consumers. As a result, they are making adjustments that introduce market
economy principles. Two such adjustments are judging the performance of pro-
ducers by the demand for their products and permitting consumer demand to
influence production.
Workers in a communist system cannot move easily from one job to another.
And managers of businesses do not decide what is to be produced. A communist
country’s central planning agency makes most such decisions. Capitalism relies,
instead, on consumers and managers to make these decisions. People in a pure
communist society do not own property. All economic decisions are made by
government leaders. These leaders decide how scarce resources will be used.
The members of a communist country have few of the economic freedoms that
Americans believe are important.

CHECKPOINT

List three types of economic-political systems.

3.2 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. An organized way for a country to decide how to use its productive
resources is called a(n)
a. economic system
b. political system
c. economic-political system
d. political economy
2. Jax lives in a country where only individual buying decisions in the
marketplace determine what, how, and for whom goods and ser-
vices will be produced. Jax lives in a country that has primarily a
a. market economy
b. command economy
c. socialist economy
d. none of the above

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Describe why most countries can be seen as having a mixed economy.
4. Describe the goals of privatizing government
services.

thomsonedu.com/school/bpmxtra

61