The Mixed The Mixed Economy Economy Unit 3 Notes Unit 3 Notes Standard 12.2: Standard 12.2: Students analyze the Students analyze the elements of America’s market economy in a elements of America’s market economy in a global setting global setting Standard 12.6: Standard 12.6: Students analyze issues Students analyze issues of international trade and explain how the of international trade and explain how the U.S. economy affects, and is affected by, U.S. economy affects, and is affected by, economic forces beyond the U.S. borders. economic forces beyond the U.S. borders. SWBAT: Describe and provide examples of the similarities and differences between a command, pure market and mixed economy
Transcript
The Mixed EconomyThe Mixed EconomyUnit 3 NotesUnit 3 NotesStandard 12.2: Standard 12.2: Students analyze the elements of Students analyze the elements of America’s market economy in a global settingAmerica’s market economy in a global setting
Standard 12.6: Standard 12.6: Students analyze issues of Students analyze issues of international trade and explain how the U.S. economy international trade and explain how the U.S. economy affects, and is affected by, economic forces beyond the affects, and is affected by, economic forces beyond the U.S. borders.U.S. borders.
SWBAT: Describe and provide examples of the similarities and differences between a command, pure market and mixed economy
Warm-UpWarm-Up
REVIEW: What are the THREE ECONOMIC QUESTIONS?
1) List them
2) Provide a summary
**If you don’t remember, look at your notes from last unit or get a textbook and open to page 34.
Three Basic Econ QuestionsThree Basic Econ Questions
What to Produce???What to Produce???
How to Produce??? How to Produce???
For Whom to Produce???For Whom to Produce???
HOW TO PRODUCE???HOW TO PRODUCE???
For every economy, the goods are For every economy, the goods are produced by private enterprise, the produced by private enterprise, the government, or a combination of government, or a combination of both. both.
Government OR Private Businesses
GOVERNMENT =Command EconomyGOVERNMENT =Command Economy
(Pure Centrally Planned Economy) (Pure Centrally Planned Economy) Government produces everything. All resources Government produces everything. All resources
are government owned and production is are government owned and production is coordinated by the central plans of government.coordinated by the central plans of government.
(Pure Market Economy)(Pure Market Economy) Private enterprise produces everything. There is Private enterprise produces everything. There is
no government at all.no government at all. BOTH = Mixed CapitalismBOTH = Mixed Capitalism
(Mixed Economy)(Mixed Economy) Combination of government and private enterpriseCombination of government and private enterprise
Stop, Drop, and DrawStop, Drop, and Draw
Draw one big circle map and Draw one big circle map and write “The Three Different write “The Three Different Economic Systems” as your Economic Systems” as your subject subject
Use a different color to Use a different color to symbolize each system draw symbolize each system draw two symbols for each systemtwo symbols for each system
Create a legend to color code Create a legend to color code your symbolsyour symbols
Read about Pure Market Economies Read about Pure Market Economies and Pure Centrally Planned Economiesand Pure Centrally Planned Economies
Read on pages Read on pages 35-3835-38
Create a tree map Create a tree map with and write with and write about the about the weaknesses weaknesses associated with associated with each economic each economic systems. systems.
Weaknesses of
Economic Systems
Pure Market Economies
Pure Centrally Planned
Economies
PME PCPEPME PCPE
Difficult enforcing Difficult enforcing property rightsproperty rights
Some people have Some people have few resourcesfew resources
Some firms try to Some firms try to monopolize marketsmonopolize markets
No public goodsNo public goods Externalities Externalities
Consumers get low Consumers get low prioritypriority
Little choice of Little choice of freedomfreedom
Central planning can Central planning can be inefficientbe inefficient
Resources owned by Resources owned by the State are the State are sometimes wastedsometimes wasted
Environmental Environmental damagedamage
PURE CAPITALISMPURE CAPITALISM(PME)(PME)
PRIVATE ENTERPRISE PRODUCES PRIVATE ENTERPRISE PRODUCES EVERYTHING…meaning, INDIVIDUALS make EVERYTHING…meaning, INDIVIDUALS make the economic decisions…looking out for the economic decisions…looking out for themselves and their families. Profit is the one themselves and their families. Profit is the one and only motiveand only motive Advantages:Advantages: People have the freedom to choose, People have the freedom to choose,
provides competition so consumers get the bestprovides competition so consumers get the best DisadvantagesDisadvantages: What happens to those that need : What happens to those that need
help…the young, old, disabled…without the help of help…the young, old, disabled…without the help of government?government?
COMMANDCOMMAND(PCPE)(PCPE)
GOVERNMENT DECIDES HOW, AND GOVERNMENT DECIDES HOW, AND PRODUCES EVERYTHING!!!PRODUCES EVERYTHING!!! Only a few countries today still have much of a Only a few countries today still have much of a
command economy. (i.e.-North Korea, China)command economy. (i.e.-North Korea, China) Advantages:Advantages: ability to quickly reroute ability to quickly reroute
resources in case of emergencies [war], resources in case of emergencies [war], nationwide goals can be setnationwide goals can be set
DisadvantagesDisadvantages: creates no incentive to work : creates no incentive to work hard, lack of consumer choice, inefficienthard, lack of consumer choice, inefficient
Dear Abby…Dear Abby…
Dear Abby, Dear Abby, I am the leader of a new country I am the leader of a new country and our Parliament is in the middle and our Parliament is in the middle of a heated debate on whether to of a heated debate on whether to design an economy that is design an economy that is primarily command-oriented or primarily command-oriented or pure capitalistic-oriented. What pure capitalistic-oriented. What should I advise our new Parliament should I advise our new Parliament members to do? And Why???members to do? And Why???
Pure Capitalistic v. Command Pure Capitalistic v. Command Double Bubble Map: Compare & ContrastDouble Bubble Map: Compare & Contrast
Both a pure market economy and a pure Both a pure market economy and a pure centrally planned economy…come with centrally planned economy…come with problems.problems.
The economy we have in the U.S. is a mixed The economy we have in the U.S. is a mixed economy, which is a combination of both economy, which is a combination of both government involvement and private enterprisegovernment involvement and private enterprise
Create a double bubble map to show the Create a double bubble map to show the similarities and differences between the twosimilarities and differences between the two
What is the name of the What is the name of the economic system the economic system the similarities make up??similarities make up??
MIXED CAPITALISMMIXED CAPITALISM
BOTH GOVERNMENT AND PRIVATE BOTH GOVERNMENT AND PRIVATE ENTERPRISEENTERPRISE Most countries today are mixed!!!Most countries today are mixed!!!
(United States, Great Britain, Mexico, France, (United States, Great Britain, Mexico, France, Canada, Italy, Japan, etc….and the list goes Canada, Italy, Japan, etc….and the list goes on and on)on and on)
WHY DO YOU THINK MOST COUNTRIES WHY DO YOU THINK MOST COUNTRIES TODAY ARE MIXED??TODAY ARE MIXED??
REVIEW:REVIEW:Advantages and DisadvantagesAdvantages and Disadvantages
On your paper, create a chart that lists the advantages On your paper, create a chart that lists the advantages and disadvantages of the three different economic and disadvantages of the three different economic systems.systems.
AdvantagesAdvantages DisadvantagesDisadvantages
COMMANDCOMMAND
““define it”define it”
PUREPURE
““define it”define it”
MIXEDMIXED
““define it”define it”Think!!!
Review: Review:
Draw a tree map and Draw a tree map and place the following place the following nations under the nations under the branch you think branch you think accurately represents accurately represents its economy. its economy. United States, United States,
Mainland China, North Mainland China, North Korea, Russia, MexicoKorea, Russia, Mexico
Economic Systems
Pure Market Economies Mixed Economy
Pure Centrally Planned
Economies
The U.S. Economy TodayThe U.S. Economy Today*Mixed Capitalism**Mixed Capitalism*
GovernmentGovernment Free Enterprise -- “The Free Enterprise -- “The Market”Market”
The Government’s RoleThe Government’s Role
There are 3 levels of government:There are 3 levels of government:
a. Federal (National)a. Federal (National)
b. State (50 Individual States)b. State (50 Individual States)
c. Local (thousands and thousands of c. Local (thousands and thousands of cities/counties)cities/counties)
What Powers Does Our Gov’t What Powers Does Our Gov’t Have?Have?
2.2. Provide ServicesProvide Services-Medicare, Welfare, National Defense, etc…-Medicare, Welfare, National Defense, etc…
3.3. Issue RegulationsIssue Regulations-laws for you and me to follow for society’s -laws for you and me to follow for society’s
general welfaregeneral welfare
By taxing, spending and regulating, aBy taxing, spending and regulating, agovernment is able to somewhat government is able to somewhat alteralter the theanswers to the 3 basic questions.answers to the 3 basic questions.
WhatWhat: Production can be based on govt demand: : Production can be based on govt demand: schools, road schools, road
HowHow: Government regulations can prevent the : Government regulations can prevent the production of some goods and/or servicesproduction of some goods and/or services
WhoWho: By taxing, the govt redistribute these funds : By taxing, the govt redistribute these funds to help the old and the poorto help the old and the poor
The Government -- continuedThe Government -- continued
The Market’s RoleThe Market’s Role
NOT THE GROCERY STORE!!!NOT THE GROCERY STORE!!! The term given to describe the exchange The term given to describe the exchange
made between buyers and sellersmade between buyers and sellers BanksBanks StocksStocks Wall St.Wall St.
By trading, buying, selling, Loaning and borrowingBy trading, buying, selling, Loaning and borrowingmoney and goods, buyers and sellers are able tomoney and goods, buyers and sellers are able tosomewhat somewhat alteralter the answers to the 3 basic the answers to the 3 basicquestions.questions.
WhatWhat: Production is largely based upon supply and : Production is largely based upon supply and demand: products, stocks, popularitydemand: products, stocks, popularity
HowHow: Companies aim to produce goods and : Companies aim to produce goods and services in the most efficient way possibleservices in the most efficient way possible
WhoWho: Companies mainly target the large middle : Companies mainly target the large middle class.class.
The MarketThe Market
How the Market Works How the Market Works Efficiently???Efficiently???
Larger Market (more buyers and sellers)Larger Market (more buyers and sellers)
More Division of LaborMore Division of Labor
More Opportunities to be EfficientMore Opportunities to be Efficient
More Opportunities to make a profitMore Opportunities to make a profit
Factory ActivityFactory Activity
Division of LaborDivision of Labor
Draw the following table on your Draw the following table on your paperpaper
RoundsRounds Yabba Dabba Do Yabba Dabba Do BooksBooks
11
22
33
44
Factory ActivityFactory Activity Today you will work in teams of fourToday you will work in teams of four You will make Yabba Dabba Dos BooksYou will make Yabba Dabba Dos Books I will show you how to make them:I will show you how to make them:
Take a piece of paper, cut it in halfTake a piece of paper, cut it in half Fold it in foursFold it in fours Scarcity = ChoicesScarcity = Choices Paper clip it togetherPaper clip it together When I say When I say ‘TIME!’‘TIME!’ – STOP, DROP, and PUT – STOP, DROP, and PUT
your hands on your head!!! Or I will confiscate your hands on your head!!! Or I will confiscate your books.your books.
I need some Floor ManagersI need some Floor Managers Your job is to count the books when the round Your job is to count the books when the round
is done, throw away their paper and give them is done, throw away their paper and give them their paper clipstheir paper clips
Your job is to make sure they are not cheatingYour job is to make sure they are not cheating You can be picky – nicely folded, no tears, You can be picky – nicely folded, no tears,
able to read writingable to read writing If they don’t do a good job, you may subtract If they don’t do a good job, you may subtract
booksbooks
WorkersWorkers
You receive wages when you are You receive wages when you are productiveproductive
Complete as many as you can in the time Complete as many as you can in the time you haveyou have
If you complain, you won’t get paidIf you complain, you won’t get paid If low production, you won’t get paidIf low production, you won’t get paid If poor production, you won’t get paidIf poor production, you won’t get paid
Group Discussion QuestionsGroup Discussion Questions
What did you guys do?What did you guys do? What was good about this? What was the What was good about this? What was the
drawback?drawback? How many people cheated? Why? How many people cheated? Why? Did you feel any loyalty to the company?Did you feel any loyalty to the company? Is what you did good or bad for the Is what you did good or bad for the
company?company?
Wrap Up: IndividualWrap Up: Individual
Describe your contribution to your team.Describe your contribution to your team. Which round was your team’s most Which round was your team’s most
productive? Why?productive? Why? What could your team have done differently What could your team have done differently
to be more efficient?to be more efficient? If this was your full time job, would you have If this was your full time job, would you have
any loyalty to the factory? Why or Why not?any loyalty to the factory? Why or Why not? How could you get promoted at this factory?How could you get promoted at this factory?
If individuals are motivated by the If individuals are motivated by the ‘invisible hand’ (profit), the evolution of ‘invisible hand’ (profit), the evolution of the market economy came into being by the market economy came into being by implementing the following principles!!!implementing the following principles!!!
1.1. Division of laborDivision of labor2.2. SpecializationSpecialization3.3. Specialized capitalSpecialized capital4.4. EfficiencyEfficiency5.5. Allocation of resourcesAllocation of resources6.6. ProfitProfit
Evolution of the Market Evolution of the Market EconomyEconomy
1.1. Division of LaborDivision of Labor (people have specific tasks… (people have specific tasks…think of the assembly line)think of the assembly line)
2.2. Leads to Leads to SpecializationSpecialization (really good at one or a (really good at one or a few products)few products)
3.3. Wants to become an expert in your good, so you Wants to become an expert in your good, so you develop develop specialized capitalspecialized capital (good (good technology/tools)technology/tools)
4.4. Leads to Leads to efficiencyefficiency5.5. Allocate your resourcesAllocate your resources (sell your goods) (sell your goods)6.6. Leads to Leads to PROFITPROFIT!!!!!!
=>Look up each of these words for HW!=>Look up each of these words for HW!
• Absolute AdvantageAbsolute Advantage• Law of Comparative AdvantageLaw of Comparative Advantage• SpecializationSpecialization• BarterBarter• MoneyMoney• Division of LaborDivision of Labor
Questions 1-4Questions 1-4 Read the handout on Specialization and Read the handout on Specialization and
