Chapter 2 Review
Economic systems
Economic systems
• Traditional
• Advantages* people know what to
make based on tradition
*for whom is decided by
tradition
• Disadvantages* new ideas
discouraged
* strict social rules
Economic Systems
• Command
(controlled by the government)
• Advantages:
* can change direction quickly
* people don’t worry about
where they will work/study
• Disadvantages:
* doesn’t meet the demand of
the consumer
* no incentive to work
* slow decision making/long
paperwork process
* entrepreneurs not in need
Economic Decisions
• Market
• Advantages:
* over time can adjust to change
* high level of individual freedom
* small level of gov. interference
* everyone has a say in the
economy
• Disadvantages:
* basic needs for everyone are not
provided
* gov. needs to provided highly
needed services like healthcare &
education
* the unknown workers and
businesses face
Rich in Russia
1. What advantages and disadvantages did
Russians experience with a command
economy? With a market economy?
2. What characteristics of a market economy
have contributed to the divide between
rich and poor in Russia?
Capitalism
• Free enterprise economy
* competition
* profit motive
* private property rights
* economic freedom
Role of the Government
• Protector
• Provides certain public services
• Preserves competition in the marketplace
(regulator)
The Entrepreneur in a Capitalist
economy
• Organizes and manages land, capital and
labor in order to gain a profit
• Start up new businesses
• “want to be own boss” willing to take an
economic risk to make dreams a reality
Entrepreneurs & the economy
• People benefit from new and better
products
• Government benefits by having higher
levels of economic activity and larger
taxes
The Consumer
• Determine which goods are bought and
produced
• Express their wants in the form of
purchases
• Dollars = votes
Netflix Video
1. In what ways is the owner of Netflix's
seen as an entrepreneur?
2. In what ways is the company meeting the
wants of the consumer?
3. How is the company planning for the
future.
Economic Systems Posters
•
•
•
•
Traditional
Command
Market
Explain how each system decides the For
Whom, What and How questions every
economy must answer.