Mr. Hicks
Ms. Tschudi-Rose
26 January 2011
 WHAT
to produce?
 HOW to produce?
 FOR WHOM to produce?

Economic Efficiency
• Make the most of your resources

Economic Freedom
• Freedom from government intervention

Economic Security and Predictability
• Good/services will be available, payments made on time,
and a safety net

Economic Equity
• Fair distribution of wealth

Economic Growth and Innovation
• Innovation and higher standard of living

Additional Goals
• IE: environmental protection, full employment, universal
medical care, etc.
 Traditional Economy
• Relies on habit, custom, or ritual
 Market Economy
• Decisions on production/consumption are based
on voluntary exchanges in the market
 Command Economy
• Central authority is in command of the economy
 Mixed Economy
• Elements of Market-based economic system with
varying levels of government involvement
STRENGTHS
WEAKNESSES
-Everyone knows their role
Security
- Discourages new ideas and new
ways of doing things- inefficient
- certainty exists over WHAT and
HOW to produce -Security
- Possible punishment for breaking
rules or acting differently-lacks
freedom
- FOR WHOM = traditions/customs
-Lower standard of living
-No growth
-Life is generally stable, predictable,
and continuous
-Basic needs are met
EXAMPLES: Inuit, small communities around the world, Amish
STRENGTHS
WEAKNESSSES
- Adjust to change over time
Efficiency
- FOR WHOM (rewards go to the most
productive resources)
- Freedom exists for everyone
less equity
Gov’t involvement is limited to
protecting property and providing
public goods: Growth
Basic needs not met for all
-Decision making is decentralized
-Freedom/ consumer sovereignty
- Variety of goods and services
- High degree of consumer
satisfaction (consumer sovereignty)
EXAMPLES: United States, Hong Kong , Mexico, Canada, Japan
There are NO PURE Market economies, but these are the closest.
STRENGTHS
WEAKNESSES
- Can change direction in a relatively
short time
- Not designed to meet individual
wants/needs no consumer
sovereignty
Equity- all needs are met
- Lack of incentives no profit motive
or competition
- Requires large decision-making
bureaucracy ; lacks efficiency
-No flexibility to deal with minor dayto-day problems lacks efficiency
- People with new/unique ideas can’t
get ahead ( no profit motive)
EXAMPLES: North Korea, Cuba, Iran, Communist China, former USSR
STRENGTHS
WEAKNESSES
Varying levels of gov’ t interference* - Difficult to transition from centrally
planned to free market
-High level of economic freedom
-More equity, basic needs help
-Safety net for all
- Not enough involvement from the
government vs. too much
involvement already
- Foreign investment/free trade are
encouraged
*The government will use influence to keep order, provide vital
services, and to promote the general welfare.
EXAMPLES:
All modern economies
FREE MARKET
Hong Kong
Singapore
U.S.
U.K.
Canada
CENTRALLY PLANNED
Mexico
France
South Africa
Poland
Japan
China
Iran
Russia
North Korea
Cuba
















http://www.united-states-flag.org/
http://www.33ff.com/flags/worldflags/Hong-Kong_flag.html
https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_uk.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ca.html
http://www.crwflags.com/fotw/flags/kp.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_cu.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ch.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ir.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_rs.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_mx.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_fr.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_sf.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_pl.html
https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ja.html
http://www.ehow.com/facts_5788388_description-economic-system.html