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Chapter 12: The Economic System

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Reading Assignment: Chapter 12: The Economic System

In this assignment you will learn the characteristics of economic systems. You will become familiar with concepts such as use rights, ownership, and division of labor, that govern the production of economic goods and services. You will learn about the basic forms of distribution: reciprocity, redistribution, and markets. You will examine the differences in consumption in societies that are based on subsistence economies and in societies that generate status income.

Finally, you will learn the mechanisms by which societies of differing complexity control their economic systems.

Assignment Overview

MCQ   ::  Matching   ::  True/False  ::   Short Essay

MCQ - Chapter 12: The Economic System

1. Which of the following is NOT a necessary part of a definition of economics?

a. production
b. distribution
c. buying and selling
d. consumption

2. Which of the following is true of the concept of “supply and demand”?

a. It is the only force that controls prices and wages in the United States.
b. It is unrelated to cultural values.
c. It has prevented discrimination in wages in the United States.
d. It is as much a value statement as it is a description of economic processes.

3. Which of the following is true of the profit motive?

a. People work to maximize their material benefits in any exchange.
b. The benefits sought in an exchange may include intangible ones.
c. It is the only factor that determines the true value of commodities.
d. It is not influenced by cultural values.

4. Which of the following is NOT true of Kwakiutl exchanges?

a. Honor is an important factor in bargaining.
b. Paying too low a price could mark one as poor.
c. Selling high can mark one as stingy.
d. Both the buyer and seller attempt to maximize their immediate material benefit.

5. Which of the following is true of ownership?

a. It is a synonym for use rights.
b. It implies the right to use a resource and to deny its use to other.
c. It is based on social status such as rank, age, or sex.
d. It implies the right to deny its use to others who have use rights.

6. Which of the following is true of division of labor in bands?

a. Specialization is based on one’s birth family.
b. Voluntary differences based on the differing interests of individuals.
c. Age and gender are the fundamental criteria for specialization.
d. Kinship roles determine the specializations of individuals.

7. Which of the following is NOT one of the basic systems of distribution?

a. reciprocity
b. redistribution
c. markets
d. barter

8. Which of the following best characterizes reciprocity?

a. direct exchange
b. gift giving
c. bargaining
d. barter

9. Which of the following is necessarily true of money?

a. Its value is based on its usefulness as a commodity.
b. It is always valuable in its own right.
c. Its value is based on mutual agreement.
d. It is of no value in and of itself.

10. Which of the following is true of subsistence economies?

a. They usually give rise to major differences in wealth.
b. The work of food producers is the basis for calculating the wealth of non-food commodities.
c. They involve producing primarily for one’s own consumption.
d. They are least common in bands

Matching Exercise - Chapter 12: The Economic System

1. economics
2. commodities
3. ownership
4. unskilled laborers
5. pink-collar occupations
6. blue-collar workers
7. white-collar occupations
8. professionals
9. reciprocity
10. generalized reciprocity
11. redistribution
12. bigmanship
13. chief

14. market
15. barter
16. money
17. general-purpose money
18. consumption
19. subsistence economy
20. subsistence income
21. status income
22. feminization of poverty
23. conspicuous consumption
24. corporation
25. consumer market
26. means of production



a system of distribution for goods and services based primarily on the use of established locations for the exchange



final use by a society of goods and services



economic entrepreneurship by persons in horticulture societies who encourage economic production and gift giving in their communities



universal medium of exchange used to buy and sell any item



service occupations that are largely held by women



the acquisition and use of a surplus of goods as a way of competitively demonstrating one's success and prestige



form of exchange of goods by trading



gift giving with no expectation of immediate exchange



the tools and resources necessary for the creation of commodities and the locations in which they are used



economy in which people consume most of what they produce



an economic system in which basic needs of consumers are met by the system of production, and competition for sales may focus on non-essentials



goods produced over and above subsistence needs



goods, services, and intangible items that are determined to be useful or valuable in a particular culture



association of employers and employees that is legally entitled to act as a single person to produce goods or provide services



self-employed, college-educated service providers



presiding redistributive and political official in a nonstate society whose legal authority extends in at least some areas over members of families other than his or her own



low-paid workers, including part-time or seasonal workers, who are usually paid by the hour or for the quantity of goods they produce



sharing of surpluses with the understanding that the party receiving the gift will respond in kind in the future



the trend in which women comprise a major and growing proportion of the world's poor today



system by which people obtain or produce, distribute, and consume material goods and services



non-farm manual laborers



goods produced by each family for its own consumption



service-providing occupations such as clerical, sales, managerial, and administrative jobs



standard medium of exchange that has a mutually agreed-upon value



the right to use property and the right to deny use rights to others as long as one owns the property



contribution of commodities by all members of a group to a common pool from which they will be distributed to those who will use them

True/False - Chapter 12: The Economic System






1. Buying and selling is a component of all economic systems.



2. Cultures may define intangibles as commodities.



3. In most societies, the contributions of children add to the productive abilities of their families.



4. Reciprocity is found in all societies.



5. Big men are the same as chiefs.



6. Specialization by group is more common in food-producing societies than among foragers.



7. Markets are especially developed in sedentary societies with large populations.



8. A subsistence economy is one in which people regularly consume only a small fraction of what they produce.



9. Horticulturists typically may not be able to sell the land they control without permission from their kinship group.



10. In most societies, the herding of small animals is typically the work of men.

Short Essay Questions - Chapter 12: The Economic System

1.Illustrate the role of culture in determining what is considered to be a commodity and in determining the value that a commodity has.

2. Why must the phrase "profit motive" be understood as meaning much more than simply the desire to maximize monetary gain in transactions if it is to be considered a valid principle? What motives do people have besides economic profit when they make exchanges with each other?

3. Briefly describe Kwakiutl exchanges. What brought honor to a Kwakiutl buyer?

4. What are the five categories of economic statuses that make up the U.S. system of economic classes?

5. What are the three forms of reciprocity, and how do the social relations differ in each?

6. What benefits could Melanesians obtain from participating in the Kula Ring?

7 Explain the differences between a subsistence economy and an economy that produces status income.

8. What are the four basic means that human societies have used for controlling their economic systems? Which type of society (i.e., bands, tribes, chiefdoms, and states) is associated with each mechanism?

9. Describe the different ways in which government and private corporations may interact in a market economy.

10. Define consumer market.

Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2005, January 04). Chapter 12: The Economic System. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: This work is licensed under a Creative Commons License Creative Commons License