HKDSE Economic S.4 Section A
Basic Economic Concepts (Part 1)
02 Competition, Property Rights, Economic Systems
that aims at determining (
I. Competition (
Any institution (
who gets what.
A. In a society ( ), i.e. an economy with at least two persons, people are forced to compete (for the right ( ) to use the scarce resources)
with the others when they share the same preference on certain resources. Thus, scarcity implies (
competition in a society.
B. In a Robinson Crusoe or one-man economy, there must be
NO competition (among human beings) as there is only one man.
The only man still needs to face scarcity.
C. Forms of competition
Different forms of competition imply different rules of the game.
The rules of the game serve to determine (
the winners and losers
(after their participation in the competition).
When the rules of the game change,
the winners and the losers will change
to pay the market price”
or a rule to determine resource allocation.
2. Non-price competition
All forms of competition other than price competition.
Here are some example
as a criterion (
1. Price competition
Using “the willingness and ability (
1.By first-come-first served (
D. Discrimination ( )
No matter which form of competitions is chosen, someone will be
and someone will be less favoured. As a result,
ALL forms of competition are discriminatory in nature (
“Scarcity, competition, and discrimination are inextricably (
together. Any one implies the other two. Furthermore, to
think of a society without these is to be a romantic dreamer”
By Kevin Ho, MLKLSS 2011-2012
02 Competition, Property Rights, Economic Systems 1/2
2.By drawing lots / lottery (
3.By age / sex / race / seniority / friendship
4.By specified ability / need
or to limit (
II. Property rights ( )
The ‘rules of the game’ that are used to restrain (
[hmk5]: Just For Reference!!!
Please refer to note S.4 Chapter 16
what people can or cannot do (over a good).
A. Private property rights (system) (
If a person possesses ( ) ALL the 3 rights below, he is said to enjoy the entire ( ) private property rights (of the private property).
In reality, exclusivity and transferability
of a good are frequently matters of degree.
1. Exclusive use right
The right to “decide who can use and how to use” the good
One of them does not implies the others,
i.e. they can be separated from one another.
Also, as an owner may NOT possess ALL
from the good
the 3 rights, there is a difference between
the concept of ownership (
3. Transfer right
The right to “sell” the good (or enter various forms of contracts)
private property rights
2. Exclusive income right
The right to “receive the income derived (
B. Common property rights
A good that subjects to unrestrained common exploitation (
is called a common property.
III. The three basic economic problems and the types of economic systems Problem 1:
What (and how much) to produce?
How to produce?
For whom to produce?
A. Market economy (
) / capitalism (
Problems will be solved by market or price mechanism (
The price jointly determined by the market
B. Command ( ) or planned ( ) economy / socialism (
Problems will be solved by government authority ( ).
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