Do Now

1. Do Now The government has ordered that all video game designers must devote half their time and resources to creating educational games. Write down your first reaction.

2. Centrally Planned Economy

3. Would the government of a nation with a free market system issue an order like the one in the Do Now? Why? Why not?

4. Centrally Planned Economy: an economic system in which the government, rather than individuals, makes all decisions on the three key economic questions (What is produced? How much is produced? Who is going to buy it?) • Gov’t owns both land and capital, and labor too, because it controls where people work and what they are paid

5. I Command You!!! • Command economy: another name for a centrally planned economy • Opposes: • Private property • Free market pricing • Competition • Consumer choice

6. Spread the wealth • Socialism: an economic and political system based on the belief that wealth should be distributed evenly throughout a society • Economic equality can only exist if economic power is controlled by the government, rather than by individuals or corporations

7. All or nothing… • Communism: a political system in which the central government owns and controls all resources and means of production, and makes all economic decisions • Conflict between labor and capital: labor is the source of all value • Anti-capitalism – all the profit created by the labor of the workers ended up in the hands of the owners = exploitation of workers and unequal distribution of wealth

8. What are the characteristics of a centrally planned economy? Features Disadvantages • Government owns all factors of production • Government makes all the decisions • Bureaucrats make detailed plans • No consumer sovereignty • Results in poor quality goods, shortages, and falling production • Does not achieve equality • Efficiency suffers • Allows no freedom of choice