Economic systems
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Economic Systems. Traditional Command Market. Objectives. Identify three questions that all economic systems must answer. Describe a traditional economy Describe a command economy Describe a market economy

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Economic Systems

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Economic systems

Economic Systems


Economic systems

  • Traditional

  • Command

  • Market


Objectives

Objectives

  • Identify three questions that all economic systems must answer.

  • Describe a traditional economy

  • Describe a command economy

  • Describe a market economy

  • Explain how most economies have a mixed economy located on a continuum between a market and command economy


Vocabulary break economic system

Vocabulary BreakEconomic System

  • the system of production and distribution and consumption


Three economic questions

Three Economic Questions

  • What to produce?

  • How to produce?

  • For whom to produce?


Traditional

Traditional

  • A traditional economy is shaped largely by customs and religion.

  • Economic questions are answered by what happened in the past.

  • Traditional economies are mainly found in rural areas.


What to produce traditional

What to produce?-Traditional

  • Just what is needed to take care of self


How to produce traditional

How to produce?-Traditional

  • How it was produced in the past


For whom to produce traditional

For whom to produce?-Traditional

  • Self and one’s household


Positives of a traditional economy

Positives of a traditional economy

  • Predictable

    • Knowing what your job will be

    • Knowing the way you will live


Problems with a traditional economy

Problems with a traditional economy

  • Lack many resources

  • Only produce enough to live on


Command

Command

  • In a command economy the government answers the three basic economic question

  • Sometimes called communism


What to produce command

What to produce?-Command

  • What the government determines


How to produce command

How to produce?-Command

  • Government says how to produce


For whom to produce command

For whom to produce?-Command

  • Citizens regardless of market demand


Positives of a command economy

Positives of a command economy

  • Because the government makes the decisions, people don’t have to worry about employment, housing, education, and healthcare


Problems with a command economy

Problems with a command economy

  • Consumers get low priority

  • Little freedom of choice

  • All resources are owned by the government


Market

Market

  • In a market economy, buyers and sellers answer the three economic questions.

  • All resources are privately owned


What to produce market

What to produce?-Market

  • Producers and consumers

  • Whatever the market demands that will produce a profit


How to produce market

How to produce?-Market

By private producers


For whom to produce market

For whom to produce?-Market

  • Consumers who demand the product and are willing to pay


Positives of a market economy

Positives of a market economy

  • People can start their own businesses

  • People have choice


Problems with a market economy

Problems with a market economy

  • The desire for money may lead to poor quality of goods and services

  • Business owners have to risk losing money


Vocabulary break continuum

Vocabulary BreakContinuum

  • A continuous seamless series.

  • A link between things that gradually and seamlessly connects. It is impossible to say where one becomes the next.


Continuum of economies

Continuum of Economies

Pure Command

Pure Market

MostIndividual freedom

NoIndividual freedom

Most economies fall in between a pure market and a pure command economy on the continuum


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