Market vs. Command
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Freedom of choice
 We decided what to
produce
Prices determined by
supply and demand
Competition
 Quality/variety of products
Private property rights
 We own the businesses
and make the decisions
Profit motive
 You get to keep the $ you
make as a business
Resources used more
efficiently
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Government decides what
to produce
Government sets the prices
 Usually low which causes
a shortage
No competition
 Low quality products and
no variety
Government owns the
resources and the
businesses
Resources are wasted
Cuba & North Korea
Mixed

A combination of market and command
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Individual freedoms AND government intervention

United States, China, and many others

many countries have some version of a mixed
economy.

Pure market economies really don’t exist as no
market has total freedom from government
involvement
International Trade
26.1
Why Do Nations Trade?
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Countries do not produce everything they
need, so they import (purchase goods from
other countries) to get what they need.
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They also export (sell goods to other
countries) so other countries have what they
need
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Trade is a way to solve the problem of
scarcity
Comparative Advantage

This is the ability of a country to produce a
good at a lower cost than another country can.
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This allows countries to specialize in
producing what they are good at!
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They then keep what they need and export the
rest to other countries
Restrictions

Tariffs (a tax on an imported good) are
used to decrease imports into a country
to protect their own product and sale of a
good.

Quotas (a limit on the amount of goods
that can be imported) are also used to
block imports.
Free Trade

Free Trade is designed to help countries
trade without tariffs, quotas, or other
restrictions. Which makes trade easier.
Free Trade

NAFTA: North American Free Trade Agreement
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WTO: World Trade Organization

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Free trade between Canada, U.S., and Mexico
Oversees trade among nations
EU: European Union
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European Nations that have no trade barriers between them
Goods, services, and even workers move freely between the
nations
Common currency- Euro
Financing Trade

Balance of trade is when a countries imports
equals its exports. They break even!

Trade Surplus is when a countries exports are
greater than it’s imports. They sold more than
they bought!

Trade Deficit is when a countries imports are
greater than their exports. They bought more
than they sold!
Work Time

Finish your vocab. 23.1, 23.2, 26.1,
26.2
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Finish your Test study Guide.
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Test Friday! Use this time to study!