The economic system

2,224 views

Published on

Published in: Education
0 Comments
5 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
2,224
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
54
Comments
0
Likes
5
Embeds 0
No embeds

No notes for slide

The economic system

  1. 1. THE ECONOMIC SYSTEM 3 BASIC ECONOMIC PROBLEMS 1. WHAT GOODS AND SERVICES SHOULD BE PRODUCED AND IN WHAT QUANTITIES? 2. HOW THESE GOODS AND SERVICES SHOULD BE PRODUCED? 3. FOR WHOM SHOULD THESE GOODS AND SERVICES BE PRODUCED
  2. 2. RESOURCES/FACTORS OF PRODUCTION   LAND – SOURCE OF ALL MATERIALS AND FOOD IN WHATEVER FORM, IN OR ABOVE THE EARTH. LABOR – HUMAN EFFORT; THE AVAILABLE PHYSICAL AND MENTAL TALENTS OF THE PEOPLE WHO HAVE TO PRODUCE THE GOODS AND SERVICES
  3. 3. RESOURCES/FACTORS OF PRODUCTION  CAPITAL – TANGIBLE PHYSICAL GOOD THAT A PERSON CREATES IN THE EXPECTATIION THAT IT USE WILL IMPROVE OR INCREASE FUTURE PRODUCTION   CAPITAL FORMATION = INVESTMENT ENTREPRENEURSHIP – PEOPLE ARE COMBINIG THE OTHER THREE FACTORS TO CREATE PRODUCTS AND SERVICES
  4. 4. CHARACTERISTICS OF ENTREPRENEURS     Have competence to organize the factors of production. Know how to make business decisions. Risk Takers. Innovators
  5. 5. IS MONEY A RESOURCE OR FACTOR OF PRODUCTION?   A MEANS OF ACQUIRING WEALTH AND A WAY OF MEASURING WEALTH… IT REPRESENTS ONLY A CAIM ON THE RESOURCES OWNED BY ANY NATION
  6. 6. ECONOMIC SYSTEM  A SET OF ECONOMIC INSTITUTIONS THAT DOMINATE A GIVEN ECONOMY WITH THE MAIN OBJECTIVE OF SOLVING THE BASIC ECONOMIC PROBLEMS.
  7. 7. TRAIDITIONAL ECONOMY   ECONOMIC DECISIONS ARE MADE WITH GREAT INFLUENCE FROM THE PAST. IT FINDS ANSWERS THE ECONOMIC PROBLEMS BY COPYING/DUPLICATING DECISIONS MADE BY PREVIOUS GENERATIONS
  8. 8. TRADITIONAL ECONOMY  CHARACTERISTICS     COMMUNAL LAND OWNERSHIP THE LEADER DECIDES THE MANAGEMENT OF AGRICULTURAL PRODUCTION WHICH IS THE BASIS OF THE ECONOMY PRODUCTION, DISTRIBUTION AND USE OF ECONOMIC RESOURCES ARE BASED ON TRADITIONAL PRACTICES NEW TECHNOLOGIES ARE NOT WELCOME
  9. 9. TRADITIONAL ECONOMY  CHARACTERISTICS   THE ECONOMY IS ONLY ITS THIRD PRIORITY WHILE CULTURE AND RELIGION ARE ITS FOREMOST PRIORITIES MINES ARE USED TO GATHER RAW MATERIALS FOR PRODUCTION
  10. 10. COMMAND ECONOMY   FACTORS OF PRODUCTION AND DISTRIBUTION ARE OWNED AND MANAGED BY THE STATE OPERATES LIKE A MILITARY WHERE DECISIIONS ARE MADE FROM THE TOP AUTHORITY.
  11. 11. COMMAND ECONOMY  CHARACTERISTICS     RESOURCE ALLOCATION IS MADE BY THE GOVERNMENT. PRESENCE OF CENTRAL PLANNNG OF ALL ECONOMIC ACTIVITIES NO FREE COMPETITION (GOVERNMENT IS THE ONLY SELLER) PRODUCTS AND NEEDS OF THE PEOPLE ARE DISTRIBUTED BASED ON PRIORITIES SET BY THE GOVERNMENT
  12. 12. MARKET ECONOMY    INDIVIDUAL CONSUMERS AND BUSINESS INTERACT TO SOLVE ECONOMIC PROBLEMS. PRICE DICTATES WHAT GOODS AND SERVICES WILL BE PRODUCED. WHEN A PRICE IS AGREED U[PON AND SALE IS MADE, IT MEANS THE THREE BASIC ECONOMIC PROBLEMS ARE ANSWERED
  13. 13. MARKET ECONOMY   MARKET – describes any method, or place, at which buyers can communicate to sellers A good or service is purchased or sold for a PRICE and it determines what kind of economic activity will take place in the market system
  14. 14. MARKET ECONOMY  CHARACTERISTCS     PRIVATE SECTOR OWNS AND MANAGES THE MEANS FOR PRODUCTION THE PRICE SYSTEM IN A MARKET STRUCTURE APPLIES TO DETERMINE HOW MUCH WILL BE PAID FOR A CERTAIN COMMODITY OR SERVICE LAISSEZ-FAIRE/FREE ENTERPRISE MINIMUM GOVERNMENT INTERFERENCE
  15. 15. MARKET ECONOMY   EXISTENCE OF COMPETITION OFTEN RESULTS TO MONOPOLY. THERE IS ECONOMIC POWER
  16. 16. MIXED ECONOMY  BOTH PRIVATE AND PBLIC INSTITUTIONS EXERCISE ECONOMIC CONTROL    MEANS OF PRODUCTION ARE OWED BY PRIVATE AS WELL AS THE GOVERNMENT. PEOPLE DECIDE ON ECONOMIC ACTIVITIES WITHIN THE ECONOMY BEST COMBINATION OF CAPITALIST AND COMMAND ECONOMIES
  17. 17. CIRCULAR FLOW OF ECONOMY goods and services Factors of Production (land, labor, capital, entrepreneurship) Business Sector Household sector Factors of Payment (rent, wage, interest, profit) Payment for purchases of goods and services
  18. 18. LAW OF SCARCITY    GOODS ARE SCARCE BECAUSE THERE ARE NOT ENOUGH RESOURCES TO PRODUCE ALL THE GOODS THAT PEOPLE WANT TO CONSUME. GOODS – TANGIBLE SERVICES - INTANGIBLE

×