1.What goods and services should
be produced?
(Cars? Guns? Butter? Shoes? Corn? Rice? Bridges? Bikes? Houses? Computers?)
2. How should these goods and
services be produced?
(by hand? By machine? Inefficiently? Efficiently?)
3. Who gets these goods and
services?
(everyone? No one? A select few? Only those who can afford it?)
Standard of living – level of economic prosperity
Traditions, rituals, habits and customs answer the
economic questions in a traditional economy
Little innovation/change; slow to adapt new ideas
Examples: Amazon and African tribes, nomadic peoples
Economic system in which all three questions are
answered by individuals
PROS:
•extremely efficient; no resources are wasted
•individuals are allowed to choose
CONS:
•Pollution/environmental damage
•The rich get rich, the poor get poorer
•produces what people want, not what they need
Examples?
How the Other Half Lives:
Studies among the
Tenements of New
York (1890)
Jacob Riis
What does this political cartoon suggest about
government regulating business?
All three economic questions are answered by the
government alone
PROS:
•more fair distribution
of wealth
•Get a lot done quickly
CONS:
•low quality products
•Little innovation
•produces what people need, not what they want
Examples: any communist state or dictatorship;
North Korea, Cuba, USSR
Market/capitalist based system which the
government regulates
Most modern economies are mixed economies
Legally obligated to serve
ALL citizens (no matter
where they are) at the
same price and quality
…..not so much
Free Market/ Command/
Capitalist
Centrally
planned
Traditional
Mixed
economy
Who controls the factors
of production?
Who chooses what to
produce?
Who decides who gets what
goods and services?