Identify the Three Types of Economic Systems

question 32

Essay

Identify the three types of economic systems. How do these three types of economic systems differ from each other? How are they the same?

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Definitions:

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.

Diminishing Returns

A principle stating that as additional amounts of a variable input are added to a fixed input, beyond some point the marginal product of the variable input begins to decrease.

Unit of Labor

A measure of labor input, often represented by one worker or one hour of work, used to calculate productivity or costs.