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Types of Economies. Do you think there is a nation that is 100% traditional economy? Do you think there is a nation that is 100% command economy? Do you think there is a nation that is 100% market economy? . If you answered "NO!" to these questions, you are correct.
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Do you think there is a nation that is 100% traditional economy? • Do you think there is a nation that is 100% command economy? • Do you think there is a nation that is 100% market economy?
If you answered "NO!" to these questions, you are correct. • No nation can function on only one type of economy. All nations have some kind of mixed economy.
Think about the United States' economy as you examine these pictures.
Traditional Economoy • Insert image of AmishSource: http://www.flickr.com/photos/cathedrals/522952615/ • This is a picture of an Amish family traveling among cards on the roads. • The Amish maintain the traditions of the past. • In many Amish communities throughout Pennsylvania, the farms are operated without the use of modern farm equipment. Some homes do not have electricity. • The Amish society answers its economic questions using its customs and traditions. • The Amish are an example of the traditional part of the United States Economy.
Command Economy • Development note: Insert image - Source: http://mste.illinois.edu/courses/ci330ms/youtsey/lineinfo.html • Look at the graph image of minimum wage increases. • This graph shows the minimum wage increasing from 25 cents in 1938 to $5.15 in 1997. • This means that in 1997 the United States government is telling companies through the Minimum Wage Law that companies must pay workers at least $5.15 per hour. • The Minimum Wage Law is an example of the command part of the United States Economy.
Market Economy • Development note: Insert image Source: http://blog.lib.umn.edu/skemp013/architecture/Mall_of_America.jpg • Look at the picture of the Mall of America. • The mall is where many buyers go to purchase products and services. • Malls also provide a central location for producers to sell products and services. • These places where buyers and sellers meet are called markets. • Malls and other stores represent the market part of the United States Economy.
New York Stock Exchange • Insert picture of NYSE. • Look at the picture of the New York Stock Exchange. • This picture depicts one of the best examples of a market where buyers and sellers meet. • Here, at the New York Stock Exchange, buyers and sellers of stock meet to exchange their shares, or ownership, in a variety of companies. • In other words, you could buy, through a licensed process, a share of stock in Disney or Apple. This would actually make you an owner, a very small owner, of Disney or Apple. • The stock market on Wall Street is an example of the marketpart of the United States Economy.
These images show us that the United States is not a puremarket economy. The U.S. has elements of all three economies: • The Amish reflect a traditional economy; • The minimum wage reflects a command economy because the government tells companies how much workers get paid; • The malls and stock exchanges reflect a market economy which the United States uses to determine what will sell and how to sell it at the best price to make a profit.
This means the United States has a mixed economy. • Make this larger and center on screen
Check for Understanding Directions: Read the brief descriptions of parts of the American economy given below. For each description, select the appropriate type of economy: tradition, market, or command.
1. Chik Fil-A does not open on Sundays. A. traditional B. market C. command Answer:A Feedback: Stores being closed on Sunday is a custom from the past.
2. A new skateboard shop has opened at the local mall. A. traditional B. market C. command Answer: B Feedback: The shop opened based on public demand for the services and goods the shop can provide.
3. The U.S. Postal Service charges .37 for a postage stamp. A. traditional B. market C. command Answer: C Feedback: The government is setting the postage rate, not the market or tradition.
4. Professional athletes sign multi-million dollar contracts in their first year after college. A. traditional B. market C. command Answer: B Feedback: The players’ contracts are determined by the market’s demand for their talents and the available talent that year.
