ECONOMIC SYSTEMS 1. INDICATOR:Compare how different economic systems answer the fundamental economic questions of what goods and services to produce, how to produce them, and who will consume them.

The basic economic dilemma: SCARCITY Scarcity: the imbalance between unlimited wants and limited resources --Most people want many things, or everything, but only can have some of them (there are exceptions, ex. Bill Gates etc.) ** Individuals and nations face this dilemma

Resources and Trade Offs Resources are items needed to provide for basic goods and services (coal, oil, trees, water, etc.) or on the individual level (money, brains, skills, etc). Most only have limited resources- Cuba has sugar, Iraq has oil. Columbia has coffee and cocaine. ** Therefore, countries and people need to trade one benefit in order to gain another-GOVERNMENTS MUST MAKE THESE CHOICES. **What one gives up in order to gain something else is called OPPORTUNITY COST

SPECIALIZATION and INTERDEPENDENCE Specialization-the mass production of goods or services that a person, country, or place can produce easily. --every place is different- Why did Detroit become the Motor City? Why does Juan Valdez hail from Colombia? Interdependence-The mutual relying of people to people or country to country- the world needs each other and must trade to get items everyone wants and needs.

The 3 Economic Questions that all societies must answer What should be produced How it should be produced Who benefits from what is produced- who consumes

ECONOMIC SYSTEMS: Market/ Command/ capitalist communist Mixed/ socialist Hong Kong USA Canada Northern Europe Eg. CHINA cuba MORE GOV’T CONTROL LAISSEZ-FAIRE Every country falls somewhere on this continuum

MARKET ECONOMIES/CAPITALISM KEY CHARACTERISTICS Private ownership of property Competition Profit incentive Laissez faire policies- little government interference Low taxes Laws of Supply and demand rule Get ideas from Adam Smith QUESTION- What are some positives and negatives?

COMMAND /COMMUNIST SYSTEMS Key Characteristics: Government owns all industry Government owns all property Government decides who and what is produced Goal is to distribute wealth equally and share everything Get ideas from writings of Karl Marx QUESTION: what are some positives and negatives?

MIXED ECONOMIES/ SOCIALIST SYSTEMS Most economies are mixed Government controls key in dustries such as coal, steel, oil. (eg.- Canada provides a national health care system) Higher taxes than pure market systems More freedom than command systems

TRADITIONAL ECONOMIES Tribal communities -Things are done how they have always been done -People do what they need to do to survive -Hunting, gathering, fishing etc. -Trading of goods is common Found in parts of Africa, Latin America, Southeast Asia

ISSUES FOR DISCUSSION What role does the US government play in the American Economy How does the US government handle trade with other nations? Protectionism vs.Free Trade Tariffs- good or bad