Start thinking of the names of as many countries as you can! You will be asked for one shortly….

Mixed, Planned and Free Economies Year 10 Business Studies

What is an Economy? An economy is a system, a set of rules that decides what is produced, how it will be produced and who will receive the benefits. There are three types of economy, all trying to use their scarce resources to satisfy wants and needs: A Free (Market) Economy A Planned Economy A Mixed Economy

Free (Market) Economy In a free economy the decision as to what is produced is determined mostly by private individuals and businesses. Examples Levi’s and Wranglers have the freedom to make and sell jeans and at whatever price they chose. Private hospitals would provide health care and they could chose who to treat and how much to charge. The USA, Hong Kong and Japan are free economies.

Planned Economy In a planned economy the decision as to what is produced is determined mostly by the government (state) Examples The government would tell factories what jeans to make and what price to sell them for. The government would provide hospitals. They would probably be free. The former Soviet Union and China used to be planned economies, the closest example today is Cuba.

A Tale of Two Economies…….. Freeland Here in Freeland, we can come and go as we please and, as long as we have the money, we can buy whatever we want whenever we want. As a consumer, we are king. There are never any queues and there are new products being introduced all the time as the producers respond to our needs. Businesses are concerned with making profits and so sell what we want at the right price. They also spend money on training us so that we remain useful to them as employees. Most people here seem to have jobs. It is just as well because we must earn money to be able to pay for education and health insurance. If we didn’t have any money we could not get help if we were sick or send our children to school. In fact, if we lose our jobs we would not receive any benefits and would need to do anything to stop us from starving. ere in Freeland, there is a big gap between the rich and poor. Planitaria In Planitaria, we are at the mercy of the government and our politicians. We have very few material possessions and there are very few consumer goods produced. There is often a shortage of goods to match our needs and there are queues outside many shops. Businesses are mostly owned by the state and the government planners decide what goods will be produced and who will receive these products. The businesses carry out the orders of the state, who decide how many workers the company should employ and what they should be paid. Some of us have created a black market where we trade goods with each other without the state knowing. We have very good health, education and social services and they are free for all irrespective of background. Apart from the politicians and people in government, we all earn about the same amount of money.

Activity Create a table on paper highlighting the advantages and disadvantages of each economic system.

Mixed Economy In a mixed economy the decision as to what is produced is determined both by private individuals and businesses and the government. Examples Levi’s and Wranglers have the freedom to make and sell jeans and at whatever price they chose. The government would provide hospitals. They would probably be free. The UK is an example of a mixed economy.

The Public and Private Sector Because a mixed economy has some decisions being made by the government and some by private individuals and businesses, the economy is split into two sectors. The Public Sector – this is the part that is controlled and owned by the government. The Private Sector – this is the part that is controlled by private individuals and businesses.

Which of the goods or services shown are in the public sector and which are in the private sector in the UK? 1 2 3 6 4 5

Your Task….. Complete the activity Vivaville vs Loland on Moodle