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Why would people stand in line all day for one roll of toilet paper? PowerPoint PPT Presentation


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Why would people stand in line all day for one roll of toilet paper? . Moscow 1988. Command. Traditional. Market. Economic SYSTEM $. Every society has an economic system in which people make and distribute goods and services. . What is AN ECONOMIC SYSTEM?.

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Why would people stand in line all day for one roll of toilet paper

Why would people stand in line all day for one roll of toilet paper?

Moscow 1988


Economic system

Command

Traditional

Market

Economic SYSTEM $


Why would people stand in line all day for one roll of toilet paper

Every society has an economic system in which people make and distribute goods and services.


What is an economic system

What is AN ECONOMIC SYSTEM?

  • An economic system describes how a society determines what to produce, how to produce, and for whom to distribute goods and services.


Why would people stand in line all day for one roll of toilet paper

In any type of economic systems 3 basic questions must be answered.

  • What will be produced?

  • Howwill it be produced?

  • For whomwill it be produced?


The 3 economic systems

The 3 Economic Systems

  • Traditional

  • Command

  • Market


Traditional economic system

TraditionalECONOMIC SYSTEM

  • Traditional economic system is a community based system in which all factors of production rely on customs, and beliefs.

  • There is very little change.

  • Trade is usually very limited.

  • Today traditional economies are not common.


Traditional economic system1

TraditionalECONOMIC SYSTEM

  • What? Tradition, customs, and beliefs decide what goods and services will be produced.

  • How? Tradition, customs, and beliefs decide how goods and services will be produced.

  • For whom? For people who live in the community or the village.


Command economic system

COMMANDECONOMIC SYSTEM

In a command economy the factors of production is owned and controlled by the government.


Command economic system1

CommandEconomic System

What?The government decides what products are needed.

How?Since the government owns all means of production, it decides how goods and services will be produced.

For whom? The government decides who will get what is produced.

.


Market economic system

MarketECONOMIC SYSTEM

In a market economic system the factors of production is controlled by individuals or corporations.


Market economic system1

MarketECONOMIC SYSTEM

What? Consumers and producers decide what should be produced.

How? Consumersand producers decide how to produce.

For whom? Consumers.


Important

IMPORTANT!

  • Traditional economies only make up a small part of a country’s economy.

  • There are NOPURE Market economies in the world

  • There are NO PURE Command economies in the world.

All economies in the world have aspects of both command and market.


Therefore

Therefore…

All modern economies in the world are MIXED economies.

But the mix is different in every nation.


Why would people stand in line all day for one roll of toilet paper

USA

77%

United Kingdom

74%

Germany

71%

Russia

50%

PURE COMMAND

0%

PURE MARKET100%

In which country do you think it would be the easiest to start a business?


Why would people stand in line all day for one roll of toilet paper

Percentage of Market


Why would people stand in line all day for one roll of toilet paper

Economic Freedom Index


Identify the economic system

Identify the economic System

  • The Inuit of northern Canada serve as a prime example of a ___________economy. For thousands of years, the Inuit parents have taught their children the survival skills needed to survive in the Arctic Circle's severe climate. The children are taught to fish, hunt, and make effective tools. Once learned, these skills are passed down to the next generation. When the Inuit hunt, it is traditional for them to distribute the harvest with other families in the community.


Review

Review

  • True of False.

    The economies of Germany, Russia, and the United Kingdom have aspects of both command and the market economic systems. Explain.


Review1

REVIEW

  • An entrepreneur is someone who starts their own business. In a command economy entrepreneurs rarely exist. Why?


Review2

Review

  • Which economic system is the MOST centralized?


Review3

Review

This picture BEST represents a _______ economic system.


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