Intro To Business; Lesson 1 3

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Economic Systems

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Intro To Business; Lesson 1 3

  1. 1. ECONOMIC SYSTEMS Introduction to Business Lesson 1-3
  2. 2. Key Economic Questions <ul><li>What goods and services are to be produced? </li></ul><ul><li>How should the goods and services be produced? </li></ul><ul><li>What needs and wants will be satisfied with the goods and services produced? </li></ul>
  3. 3. Economic Systems <ul><li>Traditional (Custom-Based) Economy </li></ul><ul><li>Command Economy </li></ul><ul><li>Market Economy </li></ul>
  4. 4. <ul><li>Traditional (Custom-Based) Economy </li></ul><ul><li>Goods are produced the way they have always been produced. </li></ul><ul><li>Change and growth occur slowly in countries where </li></ul><ul><ul><li>economies follow customs, and </li></ul></ul><ul><ul><li>people are poor in material goods </li></ul></ul>
  5. 5. <ul><li>Command Economy </li></ul><ul><li>Resources are owned and controlled by the government </li></ul><ul><li>Officials of the government (central committee) decide what and how goods will be produced and how they will be shared. </li></ul>
  6. 6. <ul><li>Market Economy </li></ul><ul><li>The three questions are answered by individuals through buying and selling activities in the marketplace . </li></ul><ul><li>Consumers and businesses make economic decisions based on their own interest. </li></ul>
  7. 7. <ul><li>Marketplace is any place where buyers and sellers exchange goods, services, and some form of money </li></ul>
  8. 8. Our Economic System <ul><li>Capitalism – economic resources are usually privately owned by individuals rather than by the government </li></ul><ul><li>This freedom of the individual to choose what to produce provides the rationale for another name: </li></ul><ul><li>free enterprise or private enterprise system </li></ul>
  9. 9. <ul><li>Capitalism, free enterprise, private enterprise refer to a system in which most economic resources are privately owned and decisions about production and distribution are largely made by voluntary exchange in the marketplace </li></ul>
  10. 10. Features of US Market Economy <ul><li>Private Property </li></ul><ul><li>Profit </li></ul><ul><li>Competition </li></ul><ul><li>Freedom of Choice </li></ul>
  11. 11. <ul><li>Business – an establishment or enterprise that supplies us with goods and services in exchange for payment of some form. </li></ul>
  12. 12. <ul><li>Private Property – The right to own, use, or dispose of things of value – sell, trade, give away, or throw away. </li></ul><ul><li>Businesses also have the right to own property. </li></ul>
  13. 13. <ul><li>Profit – The money left from sales after subtracting all the costs of operating the business. </li></ul><ul><li>Businesses supply goods and services to the marketplace for one main reason – profit. </li></ul><ul><li>Profit motive – the desire to work hard and be creative to earn a higher profit </li></ul>
  14. 14. <ul><li>Competition – The rivalry among businesses to sell their goods and services to buyers. </li></ul><ul><li>Competition encourages owners to improve products, offer better services, keep prices reasonable, and produce new things. </li></ul>
  15. 15. <ul><li>Freedom of Choice – Consumers have the right to: </li></ul><ul><li>enter business or career of choice, </li></ul><ul><li>own property, </li></ul><ul><li>make a profit, </li></ul><ul><li>compete </li></ul>
  16. 16. <ul><li>Other Rights include </li></ul><ul><li>Right of workers to organize with other workers </li></ul><ul><li>Right to travel when and where you please in this country and abroad </li></ul><ul><li>Right to express opinions as long as you do not slander another person </li></ul>
  17. 17. Mixed Economic Systems <ul><li>Most countries are thought to have mixed economic systems. </li></ul><ul><li>In U.S., there is some government regulation of business. </li></ul>
  18. 18. <ul><li>There are some government-operated enterprises. </li></ul>
  19. 19. Emerging Market Economies <ul><li>Command economies are not designed to meet the wants and needs of individuals. In most controlled economies, workers with different skills and responsibilities receive similar wages – little incentive for people to work hard. </li></ul>
  20. 20. <ul><li>Many controlled economies have changed. </li></ul><ul><li>USSR (Soviet Union) is now Russia. </li></ul><ul><li>Other countries are moving toward market economies. </li></ul>
  21. 21. <ul><li>The </li></ul><ul><li>End </li></ul>

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