Intro to Econ/Economic Systems

7/30/2019 Intro to Econ/Economic Systems

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Money is noobject

what one thing

would you mostwant to have??


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Tesla Roadster: Electric Car that goes 0-60 mph in 3.7 secondsNEVER BUY GAS AGAIN!!!


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Even if money not an object, only 500made every year.


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Demand is Unlimited = EVERYBODYwants one


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SupplyisLIMITED= Not Everyone can have one!


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Scarcity means we must make choices

Making a choice means giving up thesecond alternative.

We call this an Opportunity Cost. (#12)


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Scarcity demands that wefind a way to use our

LIMITED RESOURCES wisely(#2)

Making efficient use of ourresources produces ahigherstandard of living.

(#10)


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STUDY ECONOMICS!!

Definition (#1 on handout):

The study of how a society uses its

limited resources to satisfy the unlimitedwants of its members.


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What goods andservices will beproduced?

How will they beproduced?

For whom will theybe produced?

(Distribution) (#5)


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How answer 3 economic questions =type of economic system used.

1). Traditionalgeneration after generation

2). Commandgovt decides

3). Marketindividual choices


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Economic activityis based on socialcustoms (#7)

Examples:

Hunting tribes inAfrica andnorthernCanada


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Question #1 - What is going to

be produced?

Same as ancestors in previous

generations.


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Question #2: How Will Goods andServices be Produced?:

Roles determined by previousgenerations.

If Grandfather was a farmer then Dad

was a farmer, so are you!


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Question #3: For Whom Will

Goods be Produced?

Distribution to same people whoreceived them in past generations.


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Everyone

knows whattheir role is.

Life ispredictableand stable.


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Discourages new ideas and newways of doing things.

Lack of progress leads to a lowerstandard of living.


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Economic activity is planned out by thegovernmentGOVT DECIDES! (#6)

People have few choices.

Examples: Cuba

North Korea

Former Soviet Union


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What good and services will be

produced?

Whatever the Govt tells you tomake!!


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How will goods and services

be produced?

However the Govt tells you tomake them!!


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For Whom will goods and services

be produced?

Distribute however the Govt TellsYou!!


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Little uncertainty as to who will dowhat.

No unemployment because thegovernment gives everyone a job(whether it is needed or not).


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Not designed to meet the wants ofconsumers.

Large bureaucracy = inefficient

Provides strange incentives

No rewards for individualperformances.

Do just enough to meet quotas.


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People and businesses act in their ownbest interests to answer the three basiceconomic questions.

KEY IS CHOICE!!


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Consumers andbusinesses interact

voluntarily. (#8)

Each person acts inown best interests


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What goods and services will

be produced?

Whatever products or services

producers choose to make(customers want to buy).


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How will goods and services be

produced?

In whatever way a providerchoosesusually the way that willmaximize profits.


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For whom will goods andservices be produced?

For whomever chooses to

buy the product.


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1.Competition


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2. Limited Government

(Involvement)


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3. Economic Freedom

(of Choice)


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4. Economic Incentives


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5. Private Property


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1. Competition

2. Limited Government3. Economic Freedom

4. Economic Incentives5. Private Property


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C L E E P


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High degree of individualfreedom.

Preferences of Consumersdictate what is produced.


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Economic decisions are made by all, not

limited to government officials.

Seemingly unlimited variety of goods

and services available.


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Does not provide for the basic needs ofeveryone.

Some young, elderly, disabled and other

persons would be unable to survive in a marketeconomy without governmental assistance.


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Does not providecertain services thatpeople value.

National Defense &Education.

High degree ofuncertainty

Jobs going overseas

Market Failures


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Mixed Economy

Combination of Marketand Command.

Trying to Get the Best ofBoth Worlds!!


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What are some features of the U.S.economy that come from:

Market economic systems?

Command economic systems?

Documents

Intro to Econ/Economic Systems