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Economic lesson 3
- 1. Types of EconomicSystems
- 2. Unlimited Needs Limited and Wants Resources Scarcity Just as scarcity forces you to make choices, nations must also make choices in order to use their resources efficiently.
- 3. A nation’s responses to these questions are determined by its economic system.
- 4. Types of EconomicSystems Traditional Economy Command Economy Market Economy
- 5. If most ofyour answers were A… Traditional Economy WHAT to produce? Determined by tradition HOW to produce? For WHOM to produce? Centered around traditional family and social units
- 7. If most ofyour answers were B… Command Economy WHAT to produce? Determined by HOW to produce? government For WHOM to produce? officials / “central planners”
- 9. If most ofyour answers were C… Market Economy WHAT to produce? HOW to produce? Determined by For WHOM to produce? individuals This free exchange of goods and services is called the market
- 10. How does themarket regulate economic activity? No need for government regulation! Guided by self-interest All individuals seek to fulfill their own needs and wants (Adam Smith) Self-interest benefits all of society by helping the economy grow.
- 11. How do youdecide what choices are in your self-interest? You respond to incentives! Incentives: something that encourages you to behave in a certain way Rewards Penalties
- 13. Group Activity TheUS economy is failing. Suppose California decides to secede from the United States and form its own country. You have been appointed to be a member of the council responsible for designing a new economic system. What kind of system should California adopt and why? Be sure to answer the three economic questions: Who determines what, how and for whom to produce? What are the advantages of your economic system? What are the disadvantages? Feel free to mix and match components of the three different types of economic systems. *Use vocabulary words from last week’s lessons.
- 14. Group Activity (cont.) Groups of 4-5 All members must contribute! Writer (1 page minimum) Underline key vocabulary words Artist Campaign manager How to present the material Campaign slogan Spokesperson
Editor's Notes
- #4 To allocate resources effectively, nations must address the three basic economic questions.
- #5 POLLEVERYWHERE ACTIVITY: http://www.polleverywhere.com/multiple_choice_polls/LTUzNTQ3ODAzOQ
- #6 Economic roles are passed from generation to generation
- #7 Families / tribeshunter-gatherer society
- #9 Stalin
- #10 rational self-interest in a free-market economy leads to economic well-being.Someone earning money by his own labor benefits himself. Unknowingly, he also benefits society, because to earn income on his labor in a competitive market, he must produce something others value
- #13 Most highly developed countries have economies based on the concept of market economies!!