2. WELCOME TO
BONITOPIA/ARMSTRONGTOPIA
• As part of the greatest kingdom in the history
of the world, you will have the opportunity to
participate in the greatest experiment in the
history of the world.
• Follow my rules…
3. System #1
Government Instructions
• You will act as the government during this section.
• Decide what type and how many cars you think our
class needs to function.
• Instruct each factory how many and what types of cars
they must create.
• After each round, you will award each group
$2/member if they complete their task.
4. System #1
Producer Instructions
• You will “produce” a car model each round.
• You must produce at least as many cars as the
government requires.
• At the end of each round, you will receive $2 if
your group completes it work.
5. System #2
Producer Instructions
• You will “produce” a car model each round. Your goal is
to design a car that the consumer will want to buy.
• You must set a price that you are selling your car model
for.
• Give your car model a name.
• If you do not receive at least $5 each round, you will go
bankrupt and no longer be able to produce cars.
6. System #2
Consumer Instructions
• Each round you will be given $20 to spend.
• You will decide which cars you would like to
spend your money on. You must buy at least
one car each round.
• You can buy multiple cars if you wish.
7. Simulation Debrief
• What were the positive and negative features
of both systems?
• Which system do you think worked best?
– For individuals?
– For society?
9. Economics
• The study of the production and consumption
of goods and services and the distribution of
wealth in a society.
– Production = What businesses make.
– Consumption = Who buys what.
– Distribution = Who is rich and who is poor
10. Free Market & Command Economies
Free Market Economy
• An economic system in
which prices are
determined by unrestricted
competition between
privately owned businesses.
Command Economy
• An economic system in
which production,
investment, prices, and
incomes are determined
centrally by a government.
11. Free Market System: Capitalism
• Ideas first proposed by Adam Smith (1776)
• “Economic Individualism”
12. Principle 1: Economic Freedom
• In a world with limited resources…
– Consumers can decide what to buy.
– Producers can decide what they want to make.
– Workers can decide how they want to work.
13. Principle 2: Private Property
• Individuals can own land and means of
production.
– Factory Machinery
– Land
– Labor
– Resources
• Individuals can choose how to use their property.
– Limited Government Control
14. Principle 3: Self-Interest Drives Society
• People will make decisions that benefit
themselves…But that is OKAY!!!!
• If people make a product that people want,
they will make money & people will be happy.
Everyone wins!
15. Principle 4: Competition is Good
• When businesses compete, buyers win!
– Lower Prices
– Inventive/New Ideas --> Progress!!!
16. Principle 5: Prices are Determined by
the Market
• Prices of goods & services are determined by
what buyers are willing to pay for them.
• “Invisible Hand,” Guides Market – Limited Gov.
17. Principle 6: Limited Government
• Government makes laws to protect individuals
and solve disputes.
• Individuals make economic decisions.
• Does not have influence over the market.
– “Laissez Faire”: “Let the People do as they Please”
19. Command Economy: Socialism
• Government or public owned means of
production
• Critical of wealth in the hands of a few
– Redistribution of wealth
20. Rise of Socialism
• Had roots in the Industrial Revolution…
Why might this have occurred?
21. Principle 1: Economic Control
• In a world with limited resources…
– The government should control the distribution of
resources to ensure that society is fair and
resources are used wisely.
– Generally follows a Central Plan for the future.
22. Principle 2: State Owned Property
• The government may own or influence the
property and the means of production and
businesses.
• Independent Businesses may still exist, but
they follow the rules of the government.
23. Principle 3: Social Needs Drive the
Economy
• The government determines what its citizens
need to live happy & healthy lives and tells
businesses what and how much to make.
24. Principle 4: Cooperation is Good
• Progress occurs when community
cooperates and limits competition.
• This helps ensure a fair and equal society.
25. Principle 5: Government Sets Prices
• The Government determines the value and
worth of products.
26. Principle 6: Large Government
• The government makes laws to help carry out
the central plan and to support the needs of
citizens.
