Economic Systems
UNIT ONE: BASIC ECONOMICS CONCEPTS
Bell Ringer
What
type of economic system does the
United States have?
What
are some good and bad effects of
this system that can be seen in our
country?
Economic Systems!
Three
economic
questions:
1.
What goods will be
produced?
2.
How will the goods be
produced?
3.
For whom will the goods
be produced?
Major Economic Systems
Free enterprise
Individuals own resources and control the use of those resources
Also called capitalism or market economy!
Socialism
Government controls and owns many of the resources
Command economy is a specific type of socialism
Traditional
Traditions, customs and beliefs shape the goods and services produced
by an economy
Bell Ringer
Take 5 minutes to study for your FIRST ECONOMICS
QUIZ!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Write down the definitions for the following:
Scarcity
Opportunity Cost
Factors of Production
What does the PPC show?
Free Enterprise
Advantages
Encourages competition and quality goods
Incentives for individuals and businesses
Lower prices and more variety of goods/services
Disadvantages
Wealth gap—rich get richer while the poor get poorer
Large companies may monopolize markets
Competition for inexpensive goods may lead to exploitation of workers
Socialism/Command
Advantages
Wealth equality
Maximizes social welfare over individual profit
Disadvantages
Government isn’t omniscient—anticipating the needs of the public is
nearly impossible
Lack of competition—no incentive for producers to be more efficient or
produce high-quality goods
Traditional Economies
Advantages:
Most members of society have specific role in
economy (cooperation)
More environmentally sustainable than modern
economic systems
Disadvantages:
Vulnerable to weather changes and natural disasters
Vulnerable to more powerful market or command
economies who may take or damage natural
resources
Mixed Economies
Allow more freedom than command
economies
High level of state participation and
spending
EX: Possess the means of production,
participate in managerial decisions, make
decisions about labor and output
EX: Tax-funded libraries, schools, roads, utilities,
welfare, social security
Various restrictions on business are made
for the greater good
EX: Environmental regulation, labor regulation,
antitrust and intellectual property laws
Mixed Economies
Advantages
Private competition encouraged
Protection of intellectual property
(sometimes)
Social “safety net” programs
Disadvantages
Government directs resources toward
social programs—not always efficient and
often wasteful!
Government loopholes
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