Economic Systems. Traditional Command Market Objectives Identify three questions that all economic...
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Transcript of Economic Systems. Traditional Command Market Objectives Identify three questions that all economic...
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Economic Systems
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TraditionalCommandMarket
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ObjectivesIdentify three questions that all economic
systems must answer.Describe a traditional economyDescribe a command economyDescribe a market economyExplain how most economies have a
mixed economy located on a continuum between a market and command economy
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Vocabulary Break
Economic System
the system of production and distribution and consumption
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Three Economic Questions
What to produce?How to produce?For whom to produce?
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Traditional
A traditional economy is shaped largely by customs and religion.
Economic questions are answered by what happened in the past.
Traditional economies are mainly found in rural areas.
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What to produce?-Traditional
Just what is needed to take care of self
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How to produce?-Traditional
How it was produced in the past
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For whom to produce?-Traditional
Self and one’s household
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Positives of a traditional economy
PredictableKnowing what your job will be
Knowing the way you will live
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Problems with a traditional economy
Lack many resourcesOnly produce enough to live on
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Command
In a command economy the government answers the three basic economic question
Sometimes called communism
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What to produce?-Command
What the government determines
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How to produce?-Command
Government says how to produce
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For whom to produce?-Command
Citizens regardless of market demand
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Positives of a command economy
Because the government makes the decisions, people don’t have to worry about employment, housing, education, and healthcare
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Problems with a command economy
Consumers get low priority
Little freedom of choiceAll resources are owned by the government
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Market
In a market economy, buyers and sellers answer the three economic questions.
All resources are privately owned
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What to produce?-Market
Producers and consumers
Whatever the market demands that will produce a profit
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How to produce?-Market
By private producers
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For whom to produce?-Market
Consumers who demand the product and are willing to pay
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Positives of a market economy
People can start their own businesses
People have choice
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Problems with a market economy
The desire for money may lead to poor quality of goods and services
Business owners have to risk losing money
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Vocabulary Break
ContinuumA continuous seamless series. A link between things that
gradually and seamlessly connects. It is impossible to say where one becomes the next.
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Continuum of Economies
MostIndividual freedom
NoIndividual freedom
Pure Market
Pure Command
Most economies fall in between a pure market and a pure command economy on the continuum