1. Basic Economic Structures EPF1E. Comparing Economies

2. How are economies different? Essential question: 2

3. Economies are Different A variety of methods can be used to allocated goods and services. People acting individually or collectively through govt choose which methods to use to allocate different kinds of services. National economies vary in the extent to which they rely on govt directives (central planning) and signals from the private markets to allocate goods, services and resources. 3

4. What are the 3 basic economic questions? What goods and services will be produced? How will these goods and services be produced? Who will consume these goods and services? 4

5. How does each type of economy answer the 3 basic economic questions?? Essential question: 5

6. What are the 4 types of economies? Market Command Traditional Mixed 6

7. Command Economy In a command economy the government or other central authority answers all of the questions 7 Ex. North Korea

8. Traditional Economy In a traditional economy, the answer to all questions is “What has always been done.” 8

9. Market Economy Consumers decide what will be produced by casting their “dollar votes” Producers choose the most profitable method of production Goods and services are consumer by those who are willing and able to pay the market price Scare goods and services are allocated through the influence of prices on production and consumption choices. 9

10. Mixed Economy A combination The US is primarily a market economy; however, since it has some elements of govt involvement (e.g., taxation and regulation) it is sometimes called a mixed economy Most of the worlds economies today are mixes economies and exits on a continuum between market and command. Some lean towards market; others lean toward command. 10