2.01 Economic Systems
Objective 2.01 Compare different
types of economic systems:
traditional, free enterprise,
command an...
What is Economics?


Economics studies how individuals and
societies seek to satisfy needs and
wants through incentives, ...
Factors of Production


Economic Resources










Natural Resources – raw materials found in
nature that are used...
Why Economic Systems?






Nations use economic systems to
determine how to use their limited
resources effectively.
P...
Traditional Economy



Found in rural, underdeveloped countries–









Vanuatu
Pygmies of Congo
Eskimos & Indian...
Market Economy (Free Enterprise)






Also called a Free Market
Economy or Free
Enterprise Economy
Businesses and
cons...
Command Economy




The government (or
central authority)
determines what, how,
and for whom goods and
services are prod...
Mixed Economy
Combination of a
market and a
command
economy
 Government
takes of people’s
needs
 Marketplace takes
care ...
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2.01 economic-systems

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2.01 economic-systems

  1. 1. 2.01 Economic Systems Objective 2.01 Compare different types of economic systems: traditional, free enterprise, command and mixed.
  2. 2. What is Economics?  Economics studies how individuals and societies seek to satisfy needs and wants through incentives, choices, and allocation of scarce resources. Technology Oil & fuel Doctors Land
  3. 3. Factors of Production  Economic Resources      Natural Resources – raw materials found in nature that are used to produce goods Human Resources – people’s knowledge, efforts, and skills used in their work Capital Resources – used to produce goods and services (buildings, materials, and equipment) Entrepreneurial Resources - recognize the need for new goods or service Scarcity – shortage of resources
  4. 4. Why Economic Systems?    Nations use economic systems to determine how to use their limited resources effectively. Primary goal of an economic system is to provide people with a minimum standard of living, or quality of life. Different types of Economic Systems  Traditional Economy  Market Economy (free enterprise)  Command Economy  Mixed Economy
  5. 5. Traditional Economy  Found in rural, underdeveloped countries–       Vanuatu Pygmies of Congo Eskimos & Indian tribes Belarus Customs govern the economic decisions that are made Farming, hunting and gathering are done the same way as the generation before     Economic activities are centered around the family or ethnic unit Men and women are given different economic roles and tasks Advantages: people have specific roles; security in the way things are done Disadvantages: Technology is not used; difficult to improve
  6. 6. Market Economy (Free Enterprise)    Also called a Free Market Economy or Free Enterprise Economy Businesses and consumers decide what they will produce and purchase and in what quantities Decisions are made according to law of supply & demand     Supply and demand of goods and services determine what is produced and the price that will be charged. Advantage—competition to have the best products and services Disadvantage—huge rift between wealthy and poor Note: a true market economy does not exist.
  7. 7. Command Economy   The government (or central authority) determines what, how, and for whom goods and services are produced. Two types:   Strong Command – where government makes all decisions (communism – China, Cuba) Moderate Command – where some form of private enterprise exists but the state owns major resources (socialism – France and Sweden)  Advantages     Disadvantages     Guarantees equal standard of living for everyone Less crime and poverty Needs are provided for through the government Minimal choices Fewer choices of items No incentive to produce better product or engage in entrepreneurship Also known as a Planned or Managed Economy
  8. 8. Mixed Economy Combination of a market and a command economy  Government takes of people’s needs  Marketplace takes care of people’s wants.     Most nations have a mixed economy: United States, England, Australia Advantage—balance of needs and wants met by government and in marketplace Disadvantage— citizens have to pay taxes

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