Answer The “Three Basic Economic Questions” about the united states Who decides What should be produced? How should it be produced? For whom should it be produced? Give an example Why do we need to decide what is produced? (because of scarcity and trade-offs) Who decides what should be produced in the US? How about in North Korea? What is the goal of how it should be produced? How to get the job done for the least cost given the available inputs (labor, capital goods, technology, etc) How do we decide in the US who gets what?

Economic Systems

Economic System The way that a country uses its resources to satisfy its citizens needs and wants Types of economies: Traditional Market Command

Traditional System Things are done the way they’ve always been done Based on customs and beliefs Bartering Ad: know what is expected of you. Family and community are very strong. Dis: change is discouraged. Methods of production are inefficient.

Command Economy The government controls production and answers the 3 basic questions North Korea China Cuba Vietnam Ad: speed with which resources can be rerouted (especially during war) Dis: individual freedom and choice

Market Economy Individuals own land and businesses and make decisions through free interaction while looking out for own best interests U.S.? Ad: freedom of choice Dis: How to take care of those too young, too old, or too sick to work?

Market Freely chosen activity between buyers and sellers of goods and services What is an example of a market? Does a market have to be a physical place? What about ebay?

Mixed Economy Exhibits characteristics of more than one type of economic system Finland Sweden. Is the US a pure market economy or more mixed?