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Standard:12e2.3 Explain the roles of property rights, competition and profit in a market economy

Standard:12e2.3 Explain the roles of property rights, competition and profit in a market economy. ESLR-Analytical Thinkers Collaborative Workers Effective Communicators. Chapter 2 Section 1 Terms. Traditional economy Command economy Market economy Self-interest Incentive Mixed economy

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Standard:12e2.3 Explain the roles of property rights, competition and profit in a market economy

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  1. Standard:12e2.3 Explain the roles of property rights, competition and profit in a market economy ESLR-Analytical Thinkers Collaborative Workers Effective Communicators

  2. Chapter 2 Section 1 Terms • Traditional economy • Command economy • Market economy • Self-interest • Incentive • Mixed economy • Authoritarian socialism • Capitalism • Democratic socialism

  3. Objectives • Explain how the three basic economic questions are answered in traditional, command, and market economies • Describe the roles of self-interest and incentives in a market economy • Describe the types of mixed economies that exist today

  4. Your school • Which factors influence economic decisions in your school? • Who makes these decisions? • What are these decisions based on?

  5. The United States • Which factors influence economic decisions made in your country? • Who makes these decisions? • What are these decisions based on? • Would these answers be different in other countries?

  6. Pure Economic Models • Traditional Economies- tradition and customs answer the 3 basic questions: “For Whom to Produce” “What to produce”? “How to Produce” • Command- government officials, central planners • Market- individuals, free exchange of goods and services.

  7. Adam Smith • The market is driven by self-interest. People work to fulfill their needs and wants. • The invisible hand should regulate the economy. • Also known as laissez-faire economics

  8. How do we decide what is in our self-interest? • The Market offers incentives – these encourage you to act a certain way. • Sometimes incentives are rewards, sometimes punishments. • Can you think of an incentive that brought you to school today? A negative incentive?

  9. All economies today are “mixed” • Mixed economies blend the elements of traditional, command and market types • They are: Authoritarian Socialism Capitalism Democratic Socialism

  10. Authoritarian Socialism • Also known as Communism • Government owns or controls nearly all the factors of production REVIEW- What are the 4 factors of production?

  11. Karl Marx • Felt that life was a struggle between the bosses (bourgeoisie) and the workers (proletariat). • Workers should run things and split the profits, they should get rid of the bosses

  12. Capitalism • Individuals own the factors of production • They answer the basic economic questions • Government does play a role. • They provide services like health care and defense. • Government also regulates industry. For example, safety standards at your job.

  13. United States, Canada, Mexico, Japan are Capitalistic countries

  14. Democratic Socialism • Falls in between Communism and Capitalism • Government owns SOME of the factors of production such as utilities • Individuals control the rest of the factors of production, there are incentives and choice just like in Capitalism

  15. Sweden, Poland, France

  16. Smith vs. Marx • In teams of 3-4 Divide the 2 readings “The Wealth of Nations” and “Das Kapital” • Each team member should read and summarize ½ of an article. • All team members discuss and answer Question #2 on each reading.

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