Economic systems advantages_and_disadvantages
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Economic systems advantages_and_disadvantages

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Economic systems advantages_and_disadvantages Economic systems advantages_and_disadvantages Presentation Transcript

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