HW RB, p.14/VI
 1 economic
 3 economy
 5 economical
 7 economy
 9 economical
 11 economical
 13 Economics
 16 economic
 18 economic
 20 economics
 22 economise
 24 economical
 26 economists
2 economic
4 economic
6 economic
8 economics
10 economy
12 economy
15 economy
17 economist
19 economic - economy
21 economic
23 economic
25 economics
27 economise
TYPES OF ECONOMIC SYSTEMS
Economic system:
 An organized way in which a state or nation
allocates its resources and apportions goods and services
in the national community.
 To allocate
 To apportion
 Resources
= To share out according to a plan
= Anything that is used to produce
goods and services
SOME BASIC PREMISES…
 Resources are limited/ scarce.
 Human wants exceed resources.
 The economy decides how to allocate scarce resources by
answering some basic questions.
ECONOMIC QUESTIONS→TYPE OF ECONOMY
 What to produce?
 How to produce?
 For whom to produce?
MARKET ECONOMY
PLANNED ECONOMY
MIXED ECONOMY
Reading: RB, p. 30
• Read the first two sections and fill
in the first two columns in exercise
II (p. 31).
Market / capitalist /free-market economies
 Role of gov.:
Limited (e.g., passes laws, provides essential goods & services, ensures
fair competition)
• Ownership of resources:
By private individuals.
 Allocation of resources:
By the market mechanism (forces of supply & demand)
• Competition:Yes.
 Advantages:
Competition →lower costs, wider choice of goods and services, better
quality
 Disadvantages:
Firms may sacrifice public interest for profit, lower costs and private
interests,
market imperfections
unequal distribution of wealth
Planned / command economies
 Role of gov.:
Vital: owns resources, distributes goods and services,
plans, organizes and co-ordinates production
• Ownership of resources:
By the state
 Allocation of resources:
By the state
• Competition: No.
 Advantages:
more equal distribution of income and wealth,
production for need, not profit
 Disadvantages:
No competition  standardised goods of little variety and low
quality,
consumer choice is limited,
low motivation to work
standard of living is lower
Read “Mixed economies”
 Complete the table in exercise II.
Mixed economies: the public sector
 Role of gov.:
Supplies some public goods and services free at point
of use (paid for by taxes.)
• Ownership of resources:
By the state
 Allocation of resources:
By the state
• Competition: No.
 Advantages:
The state provides a minimum standard of living for
everyone (welfare state);
 Disadvantages:
Not mentioned in the text.
Mixed economies: the private sector
 Role of gov.:
Ensures fair competition.
Some regulation of private sector businesses through laws.
Private sector businesses also benefit from public goods and
services.
• Ownership of resources:
By individuals and businesses.
 Allocation of resources:
Market system (market mechanism)
• Competition:Yes.
 Advantages:
Not mentioned in the text.
 Disadvantages:
Not mentioned in the text.
Look at the images and decide:
 Which characteristics of market and planned economies do
the images illustrate?
 Why? Explain your answers using your notes.
Unequal distribution of income: Homelessness
Lower quality of products and standard of living
Unequal distribution of income: Large poor-rich
gap
A trailer
A recreational vehicle (RV)
Little variety and choice for consumers
Sacrificing public interest in exchange for lower
costs: Outsourcing
Unmotivated workers, standardisation
Sacrificing public interest in exchange for lower costs:
Sweatshops
VERBS  NOUNS
 Allocate
 Allocation
 Plan
 Plan
 Organise
 Organisation
 Co-ordinate
 Co-ordination
 Distribute
 Distribution
 Supply
 Supply
 Command
 Command
 Compete
 Competition
 Produce
 Production