What is this picture saying about the differences between North and South Korea?
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Command vs. Market Economies, 1/25 WARM UP • What is this picture saying about the differen ces between North and
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Transcript of What is this picture saying about the differences between North and South Korea?
Command vs. Market Economies, 1/25WARM UP
• What is this picture saying about the differences between North and South Korea?
What are command and market economies?
• Command /centrally planned economies…
• Market economies…
North Korea and South Korea• Korea was a unified
country until the end of WW2
• After the split, North Korea became a communist country with a command economy
• South Korea became a democratic republic with a market economy
South Korean Industries
North and South KoreaNorth Korea South Korea
GDP: $40 billion $1.268 trillion
GDP per capita: $1.800 $31,220
Rank in Global Economy: 125 Rank in Global Economy: 15
North Korea Economy Explained
South Korea Economy Explained
HOW THE WORLD SEES NORTH KOREA
Send a letter across the DMZ
• Write a letter to your Korean counterpart about daily life in your country.
• Include– Your job, overall happiness, your view of the
government– Questions about your neighbor’s country
Market Economies, 1/29Warm Up
• Trace the story of the $5 bill from beginning to end in this situation:
– Where did that $5 bill come from?
– Where will it go?– And after that?– And after that?
• (Don’t copy Q, simply answer it in a complete sentence)
In your notebooks…COMMAND ECONOMIES MARKET ECONOMIES
– Centrally planned economy
Command Economies
Command Economies – Government determines
what, how and for whom things will be produced
Command Economies
• Who is Karl Marx and what did he have to do with Socialism and Communism?
Command Economies Today
• No pure command economies today– modern
telecommunications bringing about change
Command Economies• Disadvantages– central planners
do not understand local conditions
– inefficient– Shortages– Few choices
Market Economies
• FEATURE 1– Private property
rights protected by law
– Relationship between buyers and sellers organized in markets
Market Economies• FEATURE 2: – Laissez faire– Capitalism– Producers create
goods according to demand
– some government involvement
Market Economies
• FEATURE 3: Voluntary Exchange in Markets– Voluntary exchange– Profit
Market Economies• FEATURE 4: – Competition– According to Consumer
sovereignty who controls what is produced?
– Competition checks producers and buyers
Market Economies
• FEATURE 5: Specialization How does specialization benefit consumers?
Market Economies• Advantages– Individuals free to make
economic choices– Political Freedom– Profit rewards hard work
Market Economies
• Disadvantages– Does not give
security to sick or aged
– Businesses did not address problems caused by industrialization
Hand over your paycheck punk!
Mixed Economy• A combination of pure
and centrally planned economy
• The US is a mixed economy– Government only
steps in when needed but is mostly hands off
– OSHA, federal minimum wage, zoning
That’s why America is freaking
awesome.
Market Economies
• KEY CONCEPTS– Circular flow model illustrates how interactions
occur in a market – SEE PAGE 53
Circular Flow Model(this is just an economist’s fancy way of showing you that you earn money, spend money, and it’s all just a circle of life)
Product Market
Firms
Factor Market
Households
Circular Flow Model Homework Assignment
• Create a Circular Flow Model using your own example of economic activity (i.e. buying a new iPad)
• Must be colored• Must be neat• Worth 20 points• DUE TOMORROW
