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Economic Systems

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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  1. Economic Systems

  2. Traditional • Command • Market

  3. 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

  4. Vocabulary BreakEconomic System • the system of production and distribution and consumption

  5. Three Economic Questions • What to produce? • How to produce? • For whom to produce?

  6. 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.

  7. What to produce?-Traditional • Just what is needed to take care of self

  8. How to produce?-Traditional • How it was produced in the past

  9. For whom to produce?-Traditional • Self and one’s household

  10. Positives of a traditional economy • Predictable • Knowing what your job will be • Knowing the way you will live

  11. Problems with a traditional economy • Lack many resources • Only produce enough to live on

  12. Command • In a command economy the government answers the three basic economic question • Sometimes called communism

  13. What to produce?-Command • What the government determines

  14. How to produce?-Command • Government says how to produce

  15. For whom to produce?-Command • Citizens regardless of market demand

  16. Positives of a command economy • Because the government makes the decisions, people don’t have to worry about employment, housing, education, and healthcare

  17. Problems with a command economy • Consumers get low priority • Little freedom of choice • All resources are owned by the government

  18. Market • In a market economy, buyers and sellers answer the three economic questions. • All resources are privately owned

  19. What to produce?-Market • Producers and consumers • Whatever the market demands that will produce a profit

  20. How to produce?-Market By private producers

  21. For whom to produce?-Market • Consumers who demand the product and are willing to pay

  22. Positives of a market economy • People can start their own businesses • People have choice

  23. 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

  24. 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.

  25. 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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