What is Economics?Economics is not just money. It's businesses and how they work. It's lemonade stands and how

many dollars they take in. It's toy collecting and baseball card collections. It's taxes and

allowances. It's stocks and bonds. Economics is part of almost everything you could ever think

about.

Compare how traditional, command, and market, economies answer the 3 economic

questions of:

What to produce?

How to produce?

For whom to produce?

Economic Systems

Command Market Traditional

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Command Economic SystemA command economy, also called planned economy, is

directly controlled by the government. The state owns all property and controls all resources including land, labor, and capital. Allocations of resources, supply, wages and price are regulated by the government. Although health, education, and transportation are available to all for little

to no cost, there is little incentive for people to work hard. As a result, production levels are barely met and products that are produced are usually of poor quality.

Compare how traditional, command, and market, economies answer the 3 economic

questions of:

What to produce?

How to produce?

For whom to produce?

Traditional Economic SystemA system in which social roles and culture determine

how goods are made, sold, and bought. Families, clans, or tribes follow certain customs that have been handed down from one generation to the next to satisfy their

basic needs (children often grow up to perform the same work as their parents). In the past, societies had

elders who decided when and how to plant crops, hunt, or move to another place. Leaders would receive goods

as tribute and they would in turn give those goods to those who needed them.

Compare how traditional, command, and market, economies answer the 3 economic

questions of:

What to produce?

How to produce?

For whom to produce?

Market Economic Systems

Based on individual choices and voluntary trade.

In a market economic system, or free enterprise system, individuals and businesses make economic decisions. People can choose to enter into business, or they may

sell their labor to anyone they want, and customers are free to spend their money as they wish. In such a

system, the market determines prices and wages (Laws of Supply and Demand).

Compare how traditional, command, and market, economies answer the 3 economic

questions of:

What to produce?

How to produce?

For whom to produce?

Command Economy Market Economy Traditional Economy

Government controlsproduction, wages

and prices

People can own andOperate a business

With little to no Government interference

People have no sayas to what the

Government does.

Society or culture determine what isproduced and sold.

Children usuallyfollow in the

occupation of their familymembers.

Laws of supply anddemand determineproduction, wages,

and prices.

Both buyers and sellers play a part in deciding what will be available

for sale and how much it will cost.

Supply and DemandDefinition: Producers supply goods and services and consumers demand

them.  Prices in the market are determined by supply and demand.

The law of SUPPLY says that as the price of

something increases, producers will produce or offer more. The opposite is also true ... if the price of something decreases,

producers will produce or offer less.

The law of DEMAND says that as the cost of something increases,

people will demand (or buy) less. The opposite

is also true ... if the cost of something

decreases, people will demand (or buy) more.

Mixed Economic System• An economic system that allows for the

simultaneous operation of publicly and privately owned. Economy in which both market forces and government intervention and direction are used to determine resource allocation and prices. The U.S. Economy is a mixed economy; while it relies to a great extent upon markets, government also regulates some of the private economy.

• Since no country has a pure command or pure market economic system, all economies combine aspects of both.

Explain how most countries have a mixed economy located on a continuum between pure market and pure

command.

There is no pure market economy, because the government regulates some things, like safety, work hours, wages, etc…

Compare and contrast the basic types of economic systems found in:

Canada

Cuba

Brazil

Canada

As an affluent, high-tech industrial society in the trillion-dollar class, Canada resembles the US in its market-oriented economic system, pattern of production, and affluent/high living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban.

Cuba

The government continues to balance the need for economic loosening against a desire for firm political control. It has rolled back limited reforms undertaken in the 1990s to increase enterprise efficiency and alleviate serious shortages of food, consumer goods, and services. The average Cuban's standard of living remains at a lower level than before the 1990s, which was caused by the loss of Soviet aid. Since late 2000, Venezuela has been providing oil on preferential terms. Cuba has been paying for the oil, in part, with the services of Cuban personnel in Venezuela, including some 20,000 medical professionals. In 2007, high metals prices continued to boost Cuban earnings from nickel and cobalt production. Havana continued to invest in the country's energy sector to mitigate electrical blackouts that had plagued the country since 2004.

Brazil

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South

American countries and is expanding its presence in world markets. Having weathered 2001-03 financial turmoil, capital inflows are regaining strength and the currency has resumed appreciating. The appreciation has slowed export

volume growth, but since 2004, Brazil's growth has yielded increases in employment and real wages.

Economic Systems

PureMarket

PureCommand

Economic

Systems

PureMarket

PureCommand

Cuba28%

Brazil57%

Canada81%

• How many basic types of economic systems are there?

• Name the economic systems.

• Which economic system do most textbooks say is the most common throughout the world?

• How many basic types of economic systems are there? 3

• Name the economic systems. Traditional, Command, Market

• Which economic system do most textbooks say is the most common throughout the world? Mixed. The GCEE states that mixed is not an economic system but rather a blending of two different types of systems.

References• http://www.emergenttech.ca/emergenttech/images/canada_map.gif • http://www.fadiba.dk/images/brazil_map.gif • http://www.investorglossary.com/command-economy.htm • http://www.socialstudiesforkids.com/subjects/economics.htm• http://www.harpercollege.edu/mhealy/geogres/maps/worldgif/wwcommand.gif • http://www.kidseconbooks.com/html/lemonade_for_sale.html • http://www.realtrees4kids.org/ninetwelve/supply.htm • https://www.cia.gov/library/publications/the-world-factbook/geos/ca.html • https://www.cia.gov/library/publications/the-world-factbook/geos/br.html • https://www.cia.gov/library/publications/the-world-factbook/geos/cu.html