Characteristics of the basic economic systems

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Presentation transcript:

Characteristics of the basic economic systems Objective 9.4 (CE9b) Characteristics of the basic economic systems

an established way of dealing with… economic system: an established way of dealing with…

consumer services goods resources capital labor producer distributor land capital labor producer distributor management entreprenuer

consumer services goods resources capital labor producer distributor land capital labor producer distributor management entreprenuer

an established way of dealing with economic system: an established way of dealing with production, distribution, and consumption of goods and services

an established way of dealing with economic system: an established way of dealing with production, distribution, and consumption of goods and services

who decides who gets the goods and services? economic system: who decides who gets the goods and services?

The key to identifying economic systems is to determine…. who is in control of… CHOICE

“Chart of economic systems” CHOICE What and how much produced How to produce For whom to produce GOVERNMENT INDIVIDUAL

command economic system

command economic system The government has complete control over choice

command economic system lack of consumer choice: the consumer has NO voice in deciding what will be produced

command economic system centrally planned economy: the national government makes the econ. decisions (What, How, For whom)

command economic system central ownership of property and resources: The national gov’t owns the factors of production

command economic system COMMUNIST: The command system is usually called “communism”

demand economic system

demand economic system The individual has complete control over choice

demand economic system Adam Smith In 1776 he wrote book: Wealth of Nations

demand economic system The book examined the consequences of economic freedom

demand economic system The book outline the free enterprise system

demand economic system “laissez-faire” means: government leaves economics alone

demand economic system individual choice: people decide how they will spend their money

demand economic system consumer sovereignty: the consumer decides what will be produced by using his buying power

demand economic system profit: the entrepreneur keeps the money that is left over after his expenses

demand economic system competition: entrepreneur tries to produce goods and services that will appeal to the consumer

demand economic system private ownership of property and resources: Individuals own the factors of production

demand economic system FREE MARKET ECONOMY: Another name for the demand economic system is “free market economy”

demand economic system CAPITALIST: Another name for the demand economic system is “capitalism”

Chart of economic systems CHOICE GOVERNMENT INDIVIDUAL

Chart of economic systems CHOICE COMMAND DEMAND

Chart of economic systems CHOICE COMMUNIST CAPITALIST

Chart of economic systems CHOICE FREE MARKET COMMUNIST