This document discusses different types of economic systems, including command economies and mixed economies. It provides examples of command economies like the former Soviet Union and modern day Cuba and North Korea. Command economies are centrally planned while mixed economies have some private enterprise but also government involvement in areas like schools, roads, and healthcare. The document contrasts command economies with mixed market economies and notes that most command economies fail in the long run due to economic inefficiencies.

1. Bellringer – Get your notebook
1. Think of some economic problems
with our modern economy
2. Look at Mankiw pages 10-11, add
principles 6 & 7 to your notes

2. What usually makes people
better off?

3. Economic Questions
1. What to produce?
2. How much to produce?
3. How to produce it?
Answers decide what economic system you have
Households? Countries? Schools? Businesses?

4. Command Economies
This is the flag of the Union of
Soviet Socialist Republics (USSR)
Why do you think they chose the
hammer and sickle as their
symbol?

5. Command Economies
Use the slips to estimate how much of each item
you eat in 1 year.
(Think about how much you would need for 1
day, then multiply by 7 (days), then multiply by
weeks (4 weeks per month), then by 12 (months
per year)

6. Command Economies
Let’s experiment:
Try and predict how much of each item you
should produce to feed the entire classroom for
one year
Be careful, this food is perishable and if you
produce too much the food will spoil.
Conversely, if you produce too little, people
will starve and die.
If your committee is 100% correct, 100% on 1st
Quiz

7. What you just did
• You tried to centrally plan the economy
• What happened to our village?

9. Command Economies
Based on the ideas of
Karl Marx (1818-1883)
German Economist
Lived in England
First Sociologist
Industrial Revolution

10. Command Economy Philosophy
• Produce needs, not wants
• Make needs as close to free as possible
• Treat workers better (safe, high wages,
benefits)
• No private property
• Economic equality
• Central planning of production
• No new types of business
Benefits of economic system?
Problems with economic system
Issues with Mankiw’s assumptions

11. USSR
• 1917-1991
• Tried experiment with
communism
– Communism =
command economy
with restricted rights.

12. Free food
“Bread Lines”
Lenningrad 1988

13. Command Economies today
• Cuba
• North Korea
• China (sort of, not
really)
• Laos
• Cambodia
• Communist parties
around the world Communist rally in France, 2007

14. Contrast with Our Mixed Economy
3. How is a command economy different
than our economy?
4. Why do most command economies fail in
the long run (30-80 years)?

15. A Range of Economic systems
Depends on Economic Rights
Free Market Mixed Command
Hong Kong
Germany
France
Sweden USSR
Cuba
North
Korea
Dubai
Singapore

16. 1. Who decides what to
produce?
2. Who decides how much to
produce?
3. Who decides how to
produce it?

17. Profit Motive
• People want profits
• Different than command economy
• Adam Smith “invisible hand”

18. Mixed Economies
• Modern countries have the government
help some
• For example….
• Schools
• Roads
• Healthcare
• Child care
• Space Travel

19. Adam Smith
• Father of Modern Economics
• Read the comic and write real or just 5
multiple choice questions on his main
ideas (A-C only)
• Print pages 9-15