Post on 06-Nov-2019
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Economic SystemsO The way in which nations decide what to produce, how
to produce it, and for whom it is made.
Basic Economic Questions
1. What goods and services will be produced?2. How will goods and services be produced?3. From whom to produce? (Who will
consume the goods and services?
Economic SystemsHow does each of the economic systems answer the
three basic economic questions?
SS6E5: The student will analyze different economic systems.
a. Compare how traditional, command, and market economies answer the economic questions of 1: what to produce, 2: how to produce, and 3: for whom to produce
Mixed Economies1. There are no pure command or market
economies.2. All modern economies have characteristics
of both command and market systems. (Mixed economy)
3. In a market economy, you have laws to protect workers and consumers.
Traditional EconomyFound in rural, non‐developed countries
BasicEconomic Questions
What goods and services will be
produced?
How will goods and services be
produced?
From whom to produce? (Who
will consume the goods and services?
Answer • Customs and habits of the past are used to decide what will be produced.
• What people need to survive
• Jobs are handed down from generation to generation.
• Hunting, farming and gathering
Make their own products for themselves
Command EconomyBasic
Economic Questions
What goods and services will be
produced?
How will goods and services be
produced?
From whom to produce? (Who
will consume the goods and services?
Answer • Government decides what will be produced.
• Workers are told what to produce and how much to produce in a given time.
Government does the planning.
• Government decides
• Expectation –everyone in country has goods they need when they need them.
Market EconomyBasic
Economic Questions
What goods and services will be
produced?
How will goods and services be
produced?
From whom to produce? (Who
will consume the goods and services?
Answer • Whatever consumers will buy
• Success of a good or service determines whether it will be produced
• Individuals or corporations decided
• Goal is the most efficient and profitable methods.
• Whoever can buy it
Other names: capitalism, free enterprise, laissez-faireMost of Europe operates in a market economy.“Free” means that businesses can operate without too many rules from the government.