Economic Systems Chapter 1 Summary Pgs. 5 – 6

Economic Systems Recall our 3 questions: What to produce? How to produce it? For whom to produce it? How does an economy as a whole answer these questions? Every economy has developed it’s own system

Cont. Every system is unique to the people/country that developed it There are similar categories Traditional (Barter) Command Market Mixed

Traditional Economy These are extremely uncommon today Generally to be found among undeveloped civilizations. People/families do what they always have Exchange of goods/services to get what you can’t make/do These communities tend to be very poor

Command Economy Public vs. Private Sector Public – Factors of Production owned by the government, they answer the 3 questions Private – Factors of Production owned by individuals, households & firms, they answer the 3 questions Command is entirely public sector This has never really happened

Market The economy would be 100% private sector. The government has no say/control over any of the Factors of Production Even the US doesn’t meet this criteria

Mixed Every modern economy is considered a “mixed economy” There is both public & private control of resources Some countries lead more one way or another

Mixed – leaning command Cuba, N. Korea, China, Vietnam & former USSR

Mixed – leaning market U.S., Japan, Canada, Europe…

Mixed – middle Sweden, Norway, France – more socialist…

Summary Economics is the study of choices Choices made by individuals, households/families, businesses & organizations and governments All choices are influenced by scarcity, opportunity costs & access to the factors of production