To what extend do different economic systems affect quality of life? Chapter 6

STOP AND THINK? We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all directly Martin Luther King Jr. Turn and Talk – Do you believe this to be true or untrue, why? Provide an example(s) to support your decision?

WARNING! IDEAL SYSTEMS???? When referring to the Economics Systems in this unit, we are discussing theories and ideal situation. No country actually has a pure model as seen by recent current events. In 2009, Canada and the United States both experienced a major recession. Canada, he mixed economy, opted for months of no-government regulations, (Shift Right) almost resulting in the fall of the government while the USA created a multi-billion dollar Stimulus Package. (Shift Left)

Economics, Systems and QOL Economics is the study of the production, distribution and consumption of goods and services. Economic systems are the way a society organizes the production, distribution, and consumption of goods and services. Quality of Life is measure of personal and collective well being

Microeconomics vs. Macroeconomics MicroeconomicsMacroeconomics What is it? Is a branch of economics that studies how individuals, households and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Bade, Robin; Michael Parkin (2001). Foundations of Microeconomics. Addison Wesley Paperback Involves the "sum total of economic activity, dealing with the issues of growth, inflation and unemployment, and with national economic policies relating to these issues“ Colander, David. Microeconomics. McGraw-Hill Paperback, 7th Edition: What are examples of it in our lives? What will I buy? - Market behavior of individual consumers Inflation, interest rate, employment & unemployment

Scarcity The basic economic problem that rises because people have unlimited wants but resources are limited. These resources are: land (materials), labor (workforce) and capital (money). People must make choices between different items because the resources necessary to fulfill their wants are limited. These decisions are made by giving up one want to satisfy another. (Opportunity Cost)

Economic Systems An economic system is loosely defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. In general, there are three major types of economic systems prevailing around the world. Market Economy, Planned Economy and Mixed Economy. Investorpedia,

Market Economy In a market economy, national and state governments play a minor role. Instead, consumers and their buying decisions drive the economy. (example: United States) Market decisions are mainly dominated by supply and demand. The role of the government in a market economy is to simply make sure that the market is stable enough to carry out its economic activities properly. Market economies aim to reduce or eliminate entirely subsidies for a particular industry, the pre-determination of prices for different commodities, and the amount of regulation controlling different industrial sectors.

Planned Economy Command economy. The most important aspect of this type of economy is that all major decisions related to the production, distribution, commodity and service prices, are all made by the government. (Former Soviet Union, Cuba) The planned economy is government directed, and market forces have very little say in such an economy. On the other hand, a planned economy aims at using all available resources for developing production instead of allotting the resources for advertising or marketing.

Mixed Economy A mixed economy combines elements of both the planned and the market economies in one cohesive system. (Example: Canada) This system prevails in many countries where neither the Government nor the business entities control the economic activities of that country both sectors play an important role in the economic decision-making of the country. Mixed economies arise in societies that seek to balance a wide range of political and economic views.

Supply and Demand Each specific good or service will have its own supply and demand patterns based on price and personal preference. If people demand a good and are willing to pay more for it, producers will add to the supply. As the supply increases, the price will fall given the same level of demand. Ideally, markets will reach a point of equilibrium where the supply equals the demand for a given price point; at this point, consumer utility and producer profits are maximized. Investorpedia,

Equilibrium Point Ideally, markets will reach a point of equilibrium where the supply equals the demand for a given price point; at this point, consumer utility and producer profits are maximized.

Competition Competition is about producers striving to get consumers to buy their products. In economics competition = rivalry among producers to sell products to consumers.

Competition As of 2004, which company was doing a better job of competing, how do you know this?