Bài giảng Economics of Social Issues - Chapter 2 Economic Systems, Resource Allocation, and Social Well-Being: Lessons From China’s Transition

Chapter 2Economic Systems, Resource Allocation, and Social Well-Being: Lessons From China’s TransitionCopyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinEconomic SystemsPure Market EconomyPrivate property rightsDecentralized decision making coordinated through marketsPure Command EconomyState ownership and/or control of economic resourcesCentralized planningMixed SystemsTransitional economy2-2Resource Allocation in aMarket EconomyMarket StructurePurely Competitive MarketsLarge number of buyers and sellersEach seller offers standardized productProduct prices free to move up or downBuyers and sellers must be mobileFreedom of entry and exitPurely Monopolistic MarketsOne sellerImperfectly Competitive Markets2-3Demand5101520.501.001.502.002.503.00Price$QuantityPrice ($)Quantity (Six-Packs per Week)$1.501,500 2.001,00 2.50 500DD Law of Demand Other Things Being Equal2-4Quantity Demanded versus Demand5101520.501.001.502.002.503.00QuantityDDD2D2D1D1Consumer IncomePrices of Related GoodsSubstitutesComplementsTastesExpectationsNumber of ConsumersPrice $2-5Supply250500750205101520QuantityPrice ($)Quantity (Cars per year)$5,000250,00010,000500,00015,000750,000SSPrice $2-6Quantity Supplied versus Supply250500750205101520QuantitySSS1S1S2S2Cost of ProductionPrices of Related GoodsSeller’s ExpectationsNumber of SellersPrice $2-7Equilibrium567891056789Price $Quantity34DDSSSurplusShortage2-8Resource Allocationin a Command EconomyCentralized PlanningThe Communist Revolution in ChinaEstablishment of a Command EconomyProblems with Centralized PlanningInitial PhaseGreat Leap ForwardState Planning CommissionCultural Revolution2-9Shortcomings of Central PlanningInformational RequirementsIncentives for Efficient ProductionHeavy Industry versus Consumer Goods2-10China’s Transition to aMarket-Oriented EconomyAgricultural ReformIndustrial ReformLessons for Other Economies2-11China’s Transition to Markets: What Are the Facts?China’s Comparative Economic Performance Since ReformReal GDPCrop ProductionChina8.92%China6.45%South Korea3.31South Korea0.05Singapore7.66Singapore10.55Vietnam7.53Vietnam4.63Low-income4.68Low-income4.10United States2.57United States1.52Real Per Capita GDPIndustrial ProductionChina8.00%China11.42%South Korea2.38South Korea5.13Singapore6.65Singapore8.50Vietnam6.43Vietnam10.29Low-income2.53Low-income5.76United States1.61United States0.762-12Problems of Transition in ChinaUnemployment and inflationCorruptionPopulation pressuresPollution problemsThe desire for democracy2-13