Chapter Two: Economic Systems

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Chapter Two Economic Systems Decision Making

• Warm Up Question
• (write answer in notebook with todays date)
• What are the Three Basic Questions of Economics?

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Unit I Basic Principles of Economics

• What do we call the place where buyers and
  sellers come together?
• This concept is a vital aspect to our economic
  system. It allows the free exchange of gs and
  the producers and consumers have the power.

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Unit I Basic Principles of Economics

• ECONOMIC SYSTEM an organized process to DECIDE
  how to use SCARCE RESOURCES to satisfy needs and
  wants.
• 3 Types of Economic Systems
• TRADITIONAL Economy
• COMMAND Economy
• MARKET Economy

What do each of these words mean to you?
Brainstorm with group
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Move to a clean sheet in notebookwe need to
make a tableECONOMIC SYSTEMS
heading MARKET COMMAND TRADITIONAL

Make it for the whole page we will add in the
rows as we go along together and then in groups!!
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Unit I Basic Principles of Economics
MARKET Economy Command Economy TRAD-ITIONAL Economy

The past dictates, customs decide
Consumers Producers decide
WHO answers the 3 BASIC QUESTIONS?
Govt Decides
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Unit I Basic Principles of Economics
MARKET Economy Command Economy TRAD-ITIONAL Economy

USA, Canada, Japan, most of Europe
WHERE do these systems exist in the world?
Inuit (Eskimo), Aboriginal (Australia), African
Amish Villages
Cuba, China, N.Korea
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Unit I Basic Principles of Economics
MARKET Economy Command Economy TRAD-ITIONAL Economy

PAGE 33
ADVANTAGES
Split Rest of Table for 2 last rows
DIS-ADVANTAGES
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Traditional Economy
Advantages Always KNOW ROLE in society STABLE and predictable life BASIC NEEDS provided
Dis-advantages LOWER STANDARD of living WANTS are not met NEW IDEAS discouraged LACK of progress, NO CHANGE
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Command Economy
Advantages Always KNOW ROLE in society Capable of DRAMATIC change BASIC NEEDS provided
Dis-advantages Has LITTLE FLEXIBILITY to deal with small day-to-day changes NEW IDEAS discouraged Requires large GOVERNMENT WANTS are not met NO INCENTIVES to get people to work
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Market Economy
Advantages Decentralized decision making bottom up Able to ADJUST TO CHANGE gradually Incredible VARIETY of gs many choices Lots of FREEDOM CHOICE (jobs, gs) LACK of GOVERNMENT interference High degree of CONSUMER SATISFACTION
Dis-advantages People face UNCERTAINTY FAILURE Does not meet NEEDS of PEOPLE (homeless, hungry, uneducated) Rewards only productive resources Must guard against market failure
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Group Activity Relay

• Can you decipher what the advantages and
  disadvantages of each of these systems would be?
• Lets see if you can work through it!!