What is an Economic System?

Opportunity cost- in order to have more of one thing; you must have less of another. Ex- more clothes, less money.

Scarcity- insufficiency or shortness of supply. Medium of Exchange- An intermediary

instrument used to facilitate the sale, purchase or trade of goods between parties. In modern economies the medium of exchange is currency.

Family oriented, self sufficient

Decisions are made according to customs (Family, Tribal, Religion)

Live off the land

Little technological influences

Each member has a role

Where might we find a “Traditional Economy”?

Govt makes all economic decisions

What, where, and how to produce products

Control of resources, factories, workers, and retail

Control over production and price

Can you think of any “Command Economies”?

Individuals make economic decisions according to supply and demand

Driven by choice

Profit drives decision making Determines how resources are used

Creates competition

Combines ideas of Command and Market Economies

Production is usually privately owned

Govt regulates and guides the economy

Can you think of any examples of economic competition/restrictions in Lawrence?