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.
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.
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.
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.