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Economics

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What studies how individuals and societies seek to satisfy needs and wants through incentives, choices, and allocation of scarce resources?

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1) What goods and services should be produced? 2) How should the goods and services be produced? 3) For whom should the goods and services be produced?

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What 3 basic economic questions must a nation answer that defines their economy?

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how to use their limited resources effectively

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Nations use economic systems to determine what?

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a minimum standard of living, or quality of life.

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Primary goal of an economic system is to provide people with what?

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-Traditional Economy -Market Economy (free enterprise) -Command Economy -Mixed Economy

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What are the different types of Economic Systems?

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Traditional Economy

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What economy is shaped largely by customs and religion?

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Traditional economies

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What economy is mainly found in rural areas with hunter/gather societies?

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traditional economy

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Basic economic questions answered by what has been done in the past

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traditional economy

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Traditions, Rituals, Habits, and Customs are maintained

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traditional economy

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Individual roles and choices are defined by the customs of elders and ancestors which govern the economic decisions being made

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traditional economy

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Sharing is a big part of these economies

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traditional economy

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Farming, hunting and gathering are done the same way as the generation before

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traditional economy

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Economic activities are centered around the family or ethnic unit Men and women are given different economic roles and tasks

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traditional economy

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Individual roles and choices are defined by the customs of elders and ancestors which govern the economic decisions being made

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traditional economy

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Sharing is a big part of these economies

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traditional economy

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Farming, hunting and gathering are done the same way as the generation before

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traditional economy

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Economic activities are centered around the family or ethnic unit

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traditional economy

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Men and women are given different economic roles and tasks

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Australian aborigines The Mbuti in Central Africa The Inuit of Northern Canada

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Example of a Traditional economies

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Whatever ritual, habit or custom dictates. Usually what is needed to take care of yourself

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How do Traditional economies answer: What to produce?

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However ritual, habit or custom dictates. Meaning how it was produced in the past

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How do Traditional economies answer: How to produce?

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For whomever ritual, habit or custom dictates. Usually for yourself and household

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How do Traditional economies answer: 3) For whom to produce?

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-There is little to no uncertainty -Everyone knows what role to play -Life is generally stable, predictable, and continuous -Security in the way things are done

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Advantages of Traditional economy

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-Tend to discourage new ideas and new ways of doing things -Lack of progress lowers standard of living -Technology is not used; difficult to improve

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Disadvantages of Traditional economies

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Command Economies

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What economy is when The government or central authority makes decisions and determines how resources will be used?

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Command

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What economy is also known as Also known as a Planned or Managed Economy

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Command

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What economy has little individual freedom?

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Command

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What economy has no competition?

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Command

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What economy has Businesses that are not run to create a profit?

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What economy has

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What economy is where consumers have few choices in the market place?

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Command

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What economy is where the government dictates the job in which you work?

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Command

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What economy is where The government sets the prices of goods and services?

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North Korea

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Only one command economy left - Where is it?

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(China and Cuba)

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2 countries that have mixed in market economy with their command structure?

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Command

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What economy is where Factories are concerned with quotas?

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Whatever the government says to produce

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How do Command economies answer the basic economic questions? What to produce?

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The government owns all the factors of production and makes all the decisions about production

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How do Command economies answer the basic economic questions? How to produce?

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For whomever the government tells you to produce (ideally the entire society)

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How do Command economies answer the basic economic questions? For whom to produce?

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-Because the government has total control over production and its factors, these economies can change rapidly. -Whatever is needed most will be produced. -There is no uncertainty (people are told when and how to work) -Free education, health care, and other public services

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Advantages of Command economy

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-Economy designed to meet needs not wants, meaning little choice of items -No incentive to work hard (people don't often lose their jobs, so they do the bare minimum to get by) -Large bureaucracy means slow decision making, raises cost of production, lacks flexibility -No reward for initiative which slows progress

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Disadvantages of Command economy

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Market Economy

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What economy is Also called a Free Market Economy or Free Enterprise Economy?

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Market

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What economy is where Businesses and consumers decide what they will produce and purchase and in what quantities?

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Market

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What economy is it where Decisions are made according to law of supply & demand?

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Market

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What economy is it where Supply and demand of goods and services determine what is produced and the price that will be charged?

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no

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Does a Pure market economy exist?

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Market

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What economy has no government involvement in economic decisions?

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Pure Market

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What economy is it where The government lets the people answer the three basic economic questions?

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Customers decide through their purchases

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In a Pure Market Economy how do the people answer the three basic economic questions? What?

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This is left up to the individual business -BUT- a business must be profitable

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In a Pure Market Economy how do the people answer the three basic economic questions? How?

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People who have money can buy more - this encourages hard work and investments

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In a Pure Market Economy how do the people answer the three basic economic questions? Who?

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Pure Market

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What economy is it that the Basic economic questions answered by consumers?

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-Adjusts to change based on consumer wants -High degree of individual freedom -Low levels of government interference -Because individuals (with money) make the decisions, everyone (with money) has a voice in the way the economy runs -Wide variety of available goods & services, competition to have the best products and services -Many choices = high degree of consumer satisfaction

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Advantages of Market Economies

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-Poverty: only those with money can participate -Market does not provide for people's basic needs. Governments must attempt to do this (think Katrina). -High degree of uncertainty people lose jobs, businesses fail -Greed based system puts profit before people -huge rift between wealthy and poor

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Disadvantages of Market Economies

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Mixed Economy

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Combination of a market and a command economy

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Mixed Economy

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Government takes care of people's needs; Marketplace takes care of people's wants.

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United States,England, Australia

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Most nations have a mixed economy, Name 3?

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Mixed

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What economies advantage is —balance of needs and wants met by government and in marketplace

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Mixed

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What economies Disadvantage—is citizens have to pay taxes

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mixed

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What economy does Government and individuals share the decision making process?

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Mixed

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What economy does Government guide and regulate production of goods and services offered?

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Mixed

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What economy does Individuals own means of production?

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Mixed

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What economy Protects consumers and workers from unfair policies

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Mixed

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What economy is the Most effective economy for providing goods and services

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Mixed

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What economy is where Government and individuals share the decision making process

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Mixed

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What economy is where Government guides and regulates production of goods and services offered

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Mixed

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What economy is where Individuals own means of production

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Mixed

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What economy is the Most effective economy for providing goods and services?

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Mixed

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What economy Protects consumers and workers from unfair policies?

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Mixed

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What economy? Some government involvement through mandatory laws and regulations that businesses follow Labor Laws, Minimum Wage

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Mixed

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What economy? The government provides social programs for those who need help Medicare, welfare

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command

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Most economies fall in between a pure market and a pure ________ economy on the continuum.

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