Chapter 2 - Economic Systems

The question asks for a basic question of an economic system that is NOT mentioned in the text. The text discusses "What to produce," "For whom to produce," and "How to produce," but does not mention "Where to produce." Therefore, "Where to produce" is the correct answer as it is not mentioned as a basic question in the text.

A centrally planned economic system ensures a guaranteed basic standard of living for its citizens. This means that the government takes responsibility for providing essential needs such as food, shelter, and healthcare to all individuals, regardless of their economic status. This benefit aims to address income inequality and ensure that everyone has access to a minimum level of well-being.

A free enterprise economic system allows for competition among businesses, which leads to better quality products and services being offered to consumers. This competition also drives prices down as businesses strive to attract customers. Therefore, the benefit of a free enterprise economic system, as stated in the text, is better quality at lower prices.

A centrally planned economic system is characterized by government control over all aspects of the economy, including production, distribution, and pricing. In such a system, there is limited individual incentive for individuals to work hard or innovate since the government dictates the allocation of resources and sets wages. This lack of individual incentive can lead to a decline in productivity and innovation, hindering economic growth and development.

A limitation of a free enterprise economic system, according to the text, is the uneven distribution of resources. This means that in such a system, resources are not distributed equally among individuals or groups, leading to disparities in wealth and opportunities. This can result in social and economic inequalities, as some individuals or groups may have more access to resources and opportunities than others.

A limitation of a mixed economic system, according to the text, is high taxation. This suggests that in a mixed economic system, there may be a significant burden of taxes on individuals and businesses. High taxation can potentially hinder economic growth and discourage investment and entrepreneurship. It can also reduce disposable income for individuals and limit their purchasing power, which may have an impact on consumer spending and overall economic activity.

A mixed economic system provides a benefit of basic social services according to the text. This means that the government or public sector plays a role in providing essential services such as healthcare, education, housing, and welfare programs to ensure the well-being of its citizens. By offering these services, a mixed economic system aims to provide a safety net and improve the overall quality of life for its population.