Understanding Economic Systems: School Decisions and Economic Models

1. Warm Up #6 Answer these 3 questions on your Chapter 2 Section 1 GPS SSEF4a, on your Guided Reading sheet. Which factors influence economic decisions made in our school? Who makes these decisions? What are these decisions based on?

2. SSEF4 a a. You will be able to compare command, market and mixed economic systems with regard to private ownership, profit motive, consumer sovereignty, competition, and government regulation. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________

3. Scaffold understanding of the standard(s) and/or element(s).Paraphrase the standard(s) and/or element(s).Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to compare (link) command (planned), market (sell goods & services) and mixed economic systems with regard to private ownership, profit motive (incentive for financial gain), consumer sovereignty (control), competition, and government regulation.

4. Class Confession We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. We will graduate on time May 20, 2016 and become productive citizens in society.

5. Types of Economic Systems SSEF4 You will be able to compare and contrast different economic systems and explain how they answer the three basic questions of what to produce, how to produce, and for whom to produce.

6. Types of Economic Systems • KEY CONCEPT • An economic system is the way in which a society uses its resources to satisfy its people’s unlimited wants. • WHY THE CONCEPT MATTERS • An economic system determines what to produce, how to produce, and for whom to produce. Countries have mixed systems, but some systems give more economic and political freedom and create more wealth than others.

7. How do nations answer the 3 basic questions? What to produce? How to produce it? For whom to produce?

8. Based on the type of Economic System • Traditional • Command • Market

9. Traditional Economy Based on a society’s values, customs and traditions. Answered by the past rituals, habits, laws and religious beliefs.

10. Characteristics of Traditional Economies • KEY CONCEPTS • Early societies all had traditional economies • Traditional systems help societies survive • Tend to be inefficient; do not adapt to change

18. Think-Pair Share discussion question? 1 min • How would your life be different if you had grown up in a traditional economy? • Advantages- everyone knows their role and little uncertainty about WHAT, HOW, and FOR WHOM to produce. • Disadvantages- discourages new ideas and new ways of thinking.

19. Command Economy Relies on government officials to answer the 3 basic questions. The government maintains complete control over the factors of production. Also called planned economies. • People’s Republic • Of China

20. Command Economies Fundamentals of Command • KEY CONCEPTS • Centrally planned economy—central government makes all decisions. • Decides for whom to produce in part by setting wages • only some people have money to buy available products

21. Think pair share discussion question?? • Are there any advantages of the command system? • Advantages • Seeks to provide for everyone even the sick and old who are no longer productive • Direction changes drastically in a relatively short time. • Disadvantages • Central planners set prices below the market which causes shortages • No incentive to work hard, because they receive similar wages regardless of skill.

22. Fundamentals of a Market Economy • KEY CONCEPTS 1. Individuals answer the 3 basic economic questions. • Private property rights—right to own businesses and resources • Property means material objects, money, intellectual property, labor • Market—place or situation where people buy and sell goods, services

23. Private Property and Contracts • Owned by individuals, businesses, instead of the government • Contracts • Agreements to buy and sell goods and services, oral or written, it is legally binding.

24. Limited Government Involvement • Government establishes health and safety laws, monitors banking practices, and prohibits discrimination in the workplace. • Laissez faire • Is the principle that the government should not interfere in the marketplace

25. Competition • Is the economic rivalry that exists among businesses selling the same or similar products. (keeps prices down) • Consumer sovereignty • -Consumers are free to purchase what they want and refuse products they do not want • i.e. Coke vs. Pepsi/ PC vs. Mac

26. Voluntary Exchange in Markets • Market Economies allow producers and consumers to make choices for their own benefit. • Voluntary exchange • When producers and consumers benefit in a trade transaction. • Profit Motive • The incentive for financial gain that a seller makes from a business transaction

27. When there is Voluntary Exchange businesses can Specialize. • Specialization • Is a situation in which people concentrate their efforts in the activities that they do best. • encourages efficient use of resources • leads to higher-quality, lower-priced products

28. Think Pair Share Question?? 1 min. • List below at least 2 disadvantages of a pure market economy? • Disadvantages • Does not provide for people to young, too old, or too sick to work • Workers and businesses face uncertainty as a result of competition and change • Does not produce enough public goods such as defense, universal education, or health care • Must guard against market failures • Advantages • Freedom for everyone • Consumer sovereignty • Lazier faire • Political Process • Profit Motives

29. Today All economies are really mixed! • KEY CONCEPTS • Mixed economy has elements of traditional, command, market systems • Most common type of economic system • Traditional, command, market economies adopt elements from others

30. Show What You Know! • Georgia Milestone Questions • Martha owns her own company. She invests in all capital goods needed to make her product and sells her goods with the motivation of making huge profits. It sounds like Martha’s company operates in a • Command economy • Market economy • Traditional economy • Economy based on equity

31. Show What You Know! • Georgia Milestone Questions • Which term is a command economic system MOST associated with? Entrepreneurship Political freedom Perfect competition Government regulation

32. Show What You Know! • Georgia Milestone Questions • Which of the following is the market economy MOST connected with? Expenses Consumers Producers Consumer sovereignty

33. Closure Activity #4 • Explain in detail, which of the following economic systems do you prefer? • Traditional • Command • Market _________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________

34. THE END • ANY QUESTIONS? • ANY QUESTIONS? • ANY QUESTIONS? • ANY QUESTIONS? • ANY QUESTIONS?

35. Warm Up #7 Do you think that the U.S. government should provide health-care coverage to ALL U.S. citizens? If not, then, what do you think the goals for the U.S. economy should be concerning health-care.

36. SSEF4 b b. You will be able to evaluate how well each type of system answers the three economic questions and meets the broad social and economic goals of freedom, security, equity, growth, efficiency, and stability. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________

37. Scaffold understanding of the standard(s) and/or element(s).Paraphrase the standard(s) and/or element(s).Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to evaluate (calculate) how well each type of system answers the three economic questions and meets the broad (wide) social (public) and economic goals of freedom, security, equity (fairness), growth, efficiency (productivity), and stability (steadiness).

38. Class Confession We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. We will graduate on time May 20, 2016 and become productive citizens in society.

39. 6 U.S. Broad Social and Economic Goals SSEF4b Evaluate how well each type of system answers the three economic questions and meets the broad social and economic goals of efficiency, equity, freedom, growth, security, and stability.

40. 6 major U.S. Economic Goals • Efficiency • Equity • Freedom • Growth • Security • Stability

41. Efficiency • Efforts to make the best use of scarce resources. If they are wasted , fewer goods and services can be produced and fewer wants and needs can be satisfied.

42. Equity • Fairness of right and wrong. • No discrimination based on age, sex, race, religion, or disability in employment. • https://www.youtube.com/watch?v=c_3mSW8XUZI

43. Freedom • Consumers decide what to purchase, workers free to choose a job & change a job. • Savers and investors are free to decide when, where, and how to save or invest.

44. Growth • It is necessary so that people can have more goods and services (availability of resources). • Standard of living • The quality of life and is measured how much each person is able to consume in a specified period of time.

45. Security • Protection from adverse economic events like insuring bank deposits, layoffs and illnesses. • Social Security • Federal program for disable and retirement benefits that covers most working people.

46. Stability • To make sure the country achieves stable prices and full employment. • Full employment • Is when the unemployment rate drops @ or below 4.5%.

47. Closure Activity #5Answer the following 3 questions: • Why is it important for governments to set economic goals? • What federal program protects economic security for working people? • What legislation safeguards economic equity?

48. Show What You Know! • Georgia Milestone Questions • Which of the following is MOST important for economic growth? efficient use of resources ample tax revenues unavailability of resources a large labor force

49. Show What You Know! • Georgia Milestone Questions • In the American economy, the goal of economic equity is MOST connected with Giving individuals a fair chance to succeed Restoring laissez-faire capitalism Creating limits on corporate profits Subsidizing businesses that would otherwise fail

50. The End • Any Questions? • Any Questions? • Any Questions? • Any Questions? • Any Questions? • Any Questions?