Warm Up #6
Answer these 3 questions on your Chapter 2
Section 1 GPS SSEF4a, on your Guided Reading
sheet.
1. Which factors influence economic decisions made in our
school?
2. Who makes these decisions?
3. What are these decisions based on?
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SSEF4 a
a. You will be able to compare command, market and mixed economic
systems with regard to private ownership, profit motive, consumer
sovereignty, competition, and government regulation.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
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Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to compare (link)
command (planned), market (sell goods
& services) and mixed economic systems
with regard to private ownership, profit
motive (incentive for financial gain),
consumer sovereignty (control),
competition, and government regulation.
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Class Confession
We the Senior Class of 2016 will complete
ALL of our assignments to best of our
abilities and behave appropriately in class.
We will respect all faculty, staff, substitutes,
classmates, and especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
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Types of Economic
Systems
SSEF4
You will be able to compare and contrast different
economic systems and explain how they answer
the three basic questions of what to produce, how
to produce, and for whom to produce.
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Types of Economic Systems
KEY CONCEPT
•
An economic system is the way in which a society uses its
resources to satisfy its people’s unlimited wants.
WHY THE CONCEPT MATTERS
•
An economic system determines what to produce, how to produce,
and for whom to produce. Countries have mixed systems, but some
systems give more economic and political freedom and create more
wealth than others.
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How do nations answer the
3 basic questions?
1. What to produce?
2. How to produce it?
3. For whom to
produce?
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Based on the type of
Economic System
Traditional
Command
Market
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Traditional Economy
Based on a society’s
values, customs and
traditions.
• Answered by the
past rituals, habits,
laws and religious
beliefs.
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Characteristics of Traditional Economies
KEY CONCEPTS
• Early societies all had traditional economies
• Traditional systems help societies survive
• Tend to be inefficient; do not adapt to change
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Think-Pair Share discussion question? 1 min
How would your life be different if you had grown up in a
traditional economy?
Advantages- everyone knows their role and little uncertainty
about WHAT, HOW, and FOR WHOM to produce.
Disadvantages- discourages new ideas and new ways of
thinking.
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Command Economy
Relies on government
officials to answer the 3
basic questions. The
government maintains
complete control over
the factors of
production.
Also called planned
economies.
People’s Republic
Of China
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Command Economies
Fundamentals of Command
KEY CONCEPTS
• Centrally planned economy—central government
makes all decisions.
• Decides for whom to produce in part by setting
wages
–only some people have money to buy available
products
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Think pair share discussion question??
Are there any advantages of the command
system?
Advantages
• Seeks to provide for everyone even the sick and old who
are no longer productive
• Direction changes drastically in a relatively short time.
Disadvantages
• Central planners set prices below the market which causes
shortages
• No incentive to work hard, because they receive similar
wages regardless of skill.
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Fundamentals of a Market Economy
KEY CONCEPTS
1. Individuals answer the 3 basic economic
questions.
2. Private property rights—right to own
businesses and resources
3. Property means material objects, money,
intellectual property, labor
4. Market—place or situation where people buy
and sell goods, services
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Private Property and Contracts
Owned by individuals, businesses, instead of the government
Contracts
•
Agreements to buy and sell goods and services, oral or written, it is
legally binding.
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Limited Government Involvement
Government establishes health and safety laws, monitors
banking practices, and prohibits discrimination in the
workplace.
Laissez faire
• Is the principle that the government should not
interfere in the marketplace
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Competition
Is the economic rivalry that exists among businesses
selling the same or similar products. (keeps prices down)
Consumer sovereignty
-Consumers are free to purchase what they want and
refuse products they do not want
i.e. Coke vs. Pepsi/ PC vs. Mac
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Voluntary Exchange in Markets
Market Economies allow producers and consumers to
make choices for their own benefit.
Voluntary exchange
•
When producers and consumers benefit in a trade transaction.
•
Profit Motive
– The incentive for financial gain that a seller makes from a
business transaction
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When there is Voluntary Exchange
businesses can Specialize.
Specialization
–Is a situation in which people concentrate their
efforts in the activities that they do best.
–encourages efficient use of resources
–leads to higher-quality, lower-priced products
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Think Pair Share Question?? 1 min.
List below at least 2 disadvantages of a pure market
economy?
Disadvantages
•
•
•
•
Does not provide for people to young, too old, or too sick to work
Workers and businesses face uncertainty as a result of competition
and change
Does not produce enough public goods such as defense, universal
education, or health care
Must guard against market failures
Advantages
•
•
•
•
•
Freedom for everyone
Consumer sovereignty
Lazier faire
Political Process
Profit Motives
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Today All economies are really mixed!
KEY CONCEPTS
• Mixed economy has elements of traditional, command,
market systems
– Most common type of economic system
• Traditional, command, market economies adopt elements
from others
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Show What You Know!
Georgia Milestone Questions
Martha owns her own company. She invests in all capital goods needed
to make her product and sells her goods with the motivation of making
huge profits. It sounds like Martha’s company operates in a
Command economy
Market economy
Traditional economy
Economy based on equity
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Show What You Know!
Georgia Milestone Questions
Which term is a command economic system MOST
associated with?
Entrepreneurship
Political freedom
Perfect competition
Government regulation
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Show What You Know!
Georgia Milestone Questions
Which of the following is the market economy MOST
connected with?
Expenses
Consumers
Producers
Consumer sovereignty
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Closure Activity #4
Explain in detail, which of the following economic
systems do you prefer?
• Traditional
• Command
• Market
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THE END
ANY QUESTIONS?
ANY QUESTIONS?
ANY QUESTIONS?
ANY QUESTIONS?
ANY QUESTIONS?
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Warm Up #7
Do you think that the U.S. government
should provide health-care coverage to ALL
U.S. citizens?
If not, then, what do you think the goals for
the U.S. economy should be concerning
health-care.
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SSEF4 b
b. You will be able to evaluate how well each type of system answers the
three economic questions and meets the broad social and economic goals of
freedom, security, equity, growth, efficiency, and stability.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to evaluate (calculate) how well
each type of system answers the three
economic questions and meets the broad (wide)
social (public) and economic goals of freedom,
security, equity (fairness), growth, efficiency
(productivity), and stability (steadiness).
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Class Confession
We the Senior Class of 2016 will complete
ALL of our assignments to best of our
abilities and behave appropriately in class.
We will respect all faculty, staff, substitutes,
classmates, and especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
NEXT
6 U.S. Broad Social and
Economic Goals
SSEF4b
Evaluate how well each type of system
answers the three economic questions and
meets the broad social and economic goals of
efficiency, equity, freedom, growth, security,
and stability.
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6 major
U.S. Economic Goals
Efficiency
Equity
Freedom
Growth
Security
Stability
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Efficiency
Efforts to make the best use of scarce resources. If they
are wasted , fewer goods and services can be produced
and fewer wants and needs can be satisfied.
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Equity
Fairness of right and wrong.
No discrimination based on age, sex, race, religion, or
disability in employment.
https://www.youtube.com/watch?v=c_3mSW8XUZI
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Freedom
Consumers decide what to purchase, workers free to
choose a job & change a job.
Savers and investors are free to decide when, where, and
how to save or invest.
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Growth
It is necessary so that people can have more goods
and services (availability of resources).
Standard of living
•
The quality of life and is measured how much each person is
able to consume in a specified period of time.
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Security
Protection from adverse economic events like insuring
bank deposits, layoffs and illnesses.
Social Security
•
Federal program for disable and retirement benefits that covers
most working people.
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Stability
To make sure the country achieves stable prices and full
employment.
Full employment
•
Is when the unemployment rate drops @ or below 4.5%.
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Closure Activity #5
Answer the following 3 questions:
1. Why is it important for governments to set economic
goals?
2. What federal program protects economic security for
working people?
3. What legislation safeguards economic equity?
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Show What You Know!
Georgia Milestone Questions
Which of the following is MOST important for
economic growth?
efficient use of resources
ample tax revenues
unavailability of resources
a large labor force
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Show What You Know!
Georgia Milestone Questions
In the American economy, the goal of economic
equity is MOST connected with
Giving individuals a fair chance to succeed
Restoring laissez-faire capitalism
Creating limits on corporate profits
Subsidizing businesses that would otherwise fail
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The End
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
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Warm Up #8
10 minutes
List 5 school regulations that
have been established, then
apply those regulations to your
everyday freedoms outside of
school.
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Class Confession
We the Senior Class of 2016 will complete ALL of
our assignments to best of our abilities and
behave appropriately in class.
We will respect all faculty, staff, substitutes
classmates, and especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
NEXT
SSEMI1a
a. You will be able to illustrate by means of a circular flow diagram, the
Product market; the Resource (factor) market; the real flow of goods and
services between and among businesses, households, and government; and
the flow of money.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to illustrate (demonstrate) by
means of a circular (round) flow diagram
(drawing), the Product market; the Resource
(factor) market; the real flow of goods and
services between and among businesses
(firms), households, and government; and the
flow of money.
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The Circular Flow of
Economic Activity
SSEMI1a
The student will describe how households,
businesses, and governments are
interdependent and interact through flows of
goods, services, and money.
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Circular Flow in Market Economies
KEY CONCEPTS
• Circular flow model illustrates how interactions occur in a
market
• Represents the two key decision makers: households &
businesses
• Shows the two markets where households and
businesses meet
– goods and services
– resources
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Two Major types of markets in a
Market Economy
Factor (Resource)
Market
• The exchanges that
businesses must make
in order to produce
things.
• Land=== Rent
• Labor===Wages
• Capital===Interest
• Entrepreneurial ability
Product Market
• Represents all of the
exchanges of goods
and services in the
economy.
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Circular Flow in Market Economies
Circular Flow
• Circular flow model shows how market
economies operate
–outside arrow shows flow of money
–inside arrow shows flow of resources and
products
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Circular Flow in Market Economies
Factor Markets
• Factor market—market for the factors of production
– land, labor, capital, entrepreneurship ability
• Individuals own all factors of production
– own some outright, such as labor; some indirectly, such
as stocks
– individuals are producers; businesses are customers
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Circular Flow in Market Economies
Product Markets
• Product market—market where goods and services
bought and sold
– includes all purchases by individuals from businesses
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Think Pair Share!
Why is a product market not a place?
Because it is not delivered in just one location.
What are some examples of product markets that are not
places?
The internet
Heating fuel
Electricity
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Show What You Know!
Georgia Milestone Questions
When the U.S. government purchases a submarine from a
company, the government has made a major transaction
in the
Factor market
Public market
Product market
Foreign exchange market
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Show What You Know!
Georgia Milestone Questions
The idea that producers make goods that consumers like
and are willing to pay for is a principle of which of the
following economic systems?
Traditional
Command
Market
Socialism
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Show What You Know!
Georgia Milestone Questions
In which economic system does the government own the
means of production?
Traditional
Mixed
Market
Command
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Closure Activity #6
FACTOR
MARKET
3
1
2
4
BUSINESSES
HOUSEHOLDS
5
6
7
PRODUCT
MARKET
8
1. The flow of labor into job market is illustrated by ____to ____.
2. The flow of wages to workers is illustrated by ____to ____.
3. The flow of rent offices, hires workers, and pays interest for
capital investments is illustrated by _____to _____.
4. The flow of consumers purchasing a product is illustrated by
_____to _____.
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Chapter 2 Vocabulary & Test
Today!
Economic System
Traditional
Command
Market
Mixed
Private Property
Contracts
Laissez faire
Competition
Voluntary exchange
Consumer sovereignty
Security
Profit motive
Specialization
Full employment
Social Security
Factor Market
Product Market
Circular Flow Market
Efficiency
Equity
Growth
Market
Stability
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The End
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
Any Questions?
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