Economic Systems

Traditional

• Economic decisions are made by bartering and trading.

- Primitive survival: hunting, farming, and gathering- No technology- Found in rural, non- industrialized areas.

- Africa, S. America, Asia

Command

• Government makes all economic decisions.– Examples: China, N. Korea, Vietnam,

Cuba, and the former Soviet Union– Advantages:

• Gov’t sets all prices; less confusion

• Only required products are made; no excess or waste

– Disadvantages

• No competition.

• Low quality of products and shortages are common.

• No individual freedoms.

Market• Decisions are made by the principles

of supply and demand.– People buy, sell, and produce what ever

they want. People can work where they want.

Market continued…

• Circular Flow:– Money, goods, and services are able to be

exchanged freely depending only on supply and demand.

Market continued…

– Capitalism: Private citizens own most means of production.• More private property than public property

– Free Enterprise: Freedom of businesses to compete for profit without govt. interference.• aka laissez faire

Mixed• Any combination of

Economic systems.– The United States is a mixed

economy because capitalism and free enterprise exist with government regulations.

• The U.S. govt. provides services such as highways, medical assistance, and transportation.

• Gov’t also owns some means of production such as postal system, utilities providers, and ABC stores

Textbook vs. Mrs. Cox

• According to the textbook, the US has a market economy

• According to Mrs. Cox, the US has a mixed economy

• According to the definitions, which one do you think that the US has?

• Because you have an MSL to test you at the end of this course…

• Textbook wins

Unit 1 Quiz

1. Which of the following best describes scarcity?a. Not enough goods for everyone

b. The amount that people want

c. Lack of desire to produce enough resources

d. Not enough resources to provide for every desire

2. What two resources keep you from doing whatever you want, whenever you want?

3. List 1 of the 4 Factors of Production.

4. Which of the following items is a want?a. 16 oz. steak b. video games

c. beach house d. all of the above

5. Which of the following countries has a Command Economic System?

a) United States b) China

c) France d) Guam

6. Many African countries have:a) Traditional Economic Systems b) Command Economic Systems c) Market Economic Systems d) Disclosed Economic Systems

7. In a pure Market Economy, The Government plays:a) a major role b) a minor role c) absolutely no role d) golf on Sundays

8. An individual putting capital into a business in hopes of profit would be found in a:

a) Traditional Economy

b) Command Economy

c) Disclosed Economy

d) Market Economy

9. What is the vocabulary word that means “an economic choice”?

10. You decide to go to a baseball game. What is the opportunity cost?

**When you are finished flip your paper over so I know you are done. Stay completely quiet until I tell you to pass your quizzes forward. If I hear any talking, I will assume you are cheating and you will receive a zero**