Economic systems advantages_and_disadvantages


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Economic systems advantages_and_disadvantages

  1. 2. <ul><li>How do economic systems answer your basic economic questions? </li></ul>
  2. 3. <ul><li>What to produce </li></ul><ul><li>How to Produce </li></ul><ul><li>For whom to produce </li></ul>
  3. 4. <ul><li>Answers the basic economic questions by rituals, habits, religious beliefs, and customs </li></ul>
  4. 5. <ul><li>Individual roles are determined the elders </li></ul><ul><li>Examples: herding cattle, hunting and gathering, subsistence farming </li></ul>
  5. 10. <ul><li>There is little or no uncertainty- everyone knows the role they play </li></ul><ul><li>Life is generally stable, predictable, and continuous </li></ul>
  6. 11. <ul><li>Tends to discourage new ideas and new ways of doing things </li></ul><ul><li>Lack of progress lowers the standard of living </li></ul>
  7. 12. <ul><li>1. What to produce? </li></ul><ul><li>Whatever customs and traditions dictate </li></ul>
  8. 13. <ul><li>2. How to produce? </li></ul><ul><li>Whatever customs and traditions dictate </li></ul>
  9. 14. <ul><li>3. For whom to produce? </li></ul><ul><li>Whatever customs and traditions dictate </li></ul>
  10. 15. <ul><li>Basic Economic Questions are answered by the government </li></ul>
  11. 16. <ul><li>Only two Command Economies left in World-Cuba and North Korea </li></ul>
  12. 17. <ul><li>It is associated with communism and socialism </li></ul>
  13. 20. <ul><li>The government has total control over production and its factors, thus the economy can change rapidly. Whatever is needed most will be produced </li></ul>
  14. 21. <ul><li>Example is collective farms which are owned and operated by the central government. Money made goes to the government </li></ul>
  15. 22. <ul><li>Free education, free healthcare, and other public services </li></ul>
  16. 23. <ul><li>Economy is designed to meet needs not wants </li></ul><ul><li>There is no incentive to work hard—people don’t often lose their jobs so they do the bare minimum </li></ul>
  17. 24. <ul><li>Economy supports a large bureaucracy (government) which means decision making is slow, costs of production are high, and there is no flexibility </li></ul>
  18. 25. <ul><li>There is no reward for initiative </li></ul>
  19. 26. <ul><li>1. What to produce? </li></ul><ul><li>Whatever the government says to produce </li></ul>
  20. 27. <ul><li>2. How to produce? </li></ul><ul><li>However the government tells you to produce </li></ul>
  21. 28. <ul><li>3. For whom to produce? </li></ul><ul><li>For whomever the government tells you to produce </li></ul>
  22. 29. <ul><li>Basic economic questions are answered by consumers </li></ul>
  23. 30. <ul><li>Laissez-faire is a pure market economy meaning “allow to do”. The government has little or no power in what is produced or sold . </li></ul>
  24. 31. <ul><li>Free-enterprise system- business owners set their own prices and sell their own goods. </li></ul>
  25. 32. <ul><li>Adjusts to change based on consumer wants </li></ul><ul><li>High level of individual freedom </li></ul><ul><li>Low level of government interference </li></ul>
  26. 33. <ul><li>Because individuals make the decisions, everyone has a voice in the way economy runs </li></ul>
  27. 34. <ul><li>Wide variety of available goods and services </li></ul><ul><li>Many choices=high degree of consumer satisfaction </li></ul>
  28. 35. <ul><li>Poverty: only those with money can participate </li></ul>
  29. 36. <ul><li>Market does not provide for people’s basic needs. Government must attempt to do this (Think about Katrina) </li></ul>
  30. 37. <ul><li>High degree of uncertainty: people lose their jobs and businesses fail </li></ul>
  31. 38. <ul><li>Greed based system puts profits before people (think about loss of jobs here. What caused it?) </li></ul>
  32. 39. <ul><li>Are they truly Free market economies? </li></ul><ul><li>Does the government regulate businesses? </li></ul><ul><li>Does the government control any businesses? </li></ul>
  33. 40. <ul><li>1. What to produce? </li></ul>
  34. 41. <ul><li>2. How to produce? </li></ul>