Topic Three

Alternative Ways of Solving the Economic Problem:

Command versus the Market Pricing System

Question for Thought: What would be the economic significance of Mitt Romney’s election as President of the United States over Barack Obama?

Required Readings:

  • Heilbroner, The Making of Economic Society, Chapter 1
  • The Wall Street Journal

Additional Readings:

LEARNING OBJECTIVES FOR TOPIC 3:

  • You should be able to explain what “resource allocation” means.
  • You should be able to identify the similarities and differences between traditional, command and market economies.
  • You should be able to explain the strengths and weaknesses of traditional, command and market economies.
  • You should be able to explain why exchange (i.e. buying and selling) takes place.
  • You should be able to explain the gains from exchange.

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