Civics Mr. Collins and Mrs. Kozlik CE 11a Economic Systems Civics Mr. Collins and Mrs. Kozlik CE 11a

Basic Economic Questions: The three basic questions of economics What will be produced? Who will produce it? For whom will it be produced? Each type of economy answers the three basic questions differently No country relies exclusively on markets to deal with the economic problem of scarcity.

Characteristics of a Traditional Economy Economic decisions are based on custom and historical precedent. People often perform the same type of work as their parents and grandparents, regardless of ability or potential. Example of a traditional economy: African nations, like Bangladesh

Characteristics of Command Economy Central ownership of property & resources (usually government controlled) Centrally-planned economy (usually planned by the government) Lack of consumer choice (ex. Only one type of potato chip or cookie)

Characteristics of a Free Market Economy Private ownership of property & resources Profit is the motivator Competition is allowed Consumer Sovereignty – consumers decide what to buy and hence what is made Individual Choice – consumer has choice of several similar products

Characteristics of a Mixed Economy Individuals, businesses, and the government share economic decision-making Government is more involved than in a free market economy Most commonly used type of economic system Government is owner and decision maker for the public sector.