Chapter Two: The Market System and the Circular Flow

Chapter Two: The Market System and the Circular Flow

2.1 Three Fundamental Economic Questions Facing an Economy (02:18)
This clip presents the three fundamental economics questions of what to produce, how to produce and for whom to produce.
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2.2 Economic Systems (06:08)
This clip introduces the concept of economic systems, and distinguishes the three commonly-mentioned systems: the command system, the market system and the mixed system.
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2.3 Characteristics of the Market System (07:02)
This clip discusses key features of the market system and their implications on the functioning of the system.
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2.4 What to Produce, How to Produce, For Whom to Produce (07:24)
This clip explains how the market system addresses the three fundamental economic questions of what to produce, how to produce and for whom to produce. This lesson is concluded by a brief discussion of Adam Smith’s Invisible Hand Theory.
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2.4a The Invisible Hand Theory (02:25)
This clip expands on the Invisible Hand Theory as presented in clip 2.4
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2.5 The Circular Flow Diagram (05:01)
This clip introduces the circular flow diagram of a closed-economy. The exposition entertains an economy with active governments, using the simpler case of no government as the starting point.
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