Economic Systems Chapter 2

Economic System An organized way of providing for the wants and needs or their people Three major types of Economic systems: Traditional Economy Command Economy Market Economy

Create the chart in your notebook and use pages 32-35 to fill it in… Traditional Command Market Strengths Weaknesses 3 economic questions

Traditional Command Market Strengths -Stable , predictable and continuous -Capable of dramatic change in short time -able to adjust to change gradually -individual freedom -less gov’t interference -large variety -consumer satisfaction Weaknesses -Discourages new ideas -Stagnation and lack of progress -Does not meet wants and needs of consumers -lacks incentives -large bureaucracy -little flexibility -discourages new and different ideas -rewards only productive resources -must guard against market failures

What? Based on tradition Traditional Command Market Strengths -Stable , predictable and continuous -Capable of dramatic change in short time -able to adjust to change gradually -individual freedom -less gov’t interference -large variety -consumer satisfaction Weaknesses -Discourages new ideas -Stagnation and lack of progress -Does not meet wants and needs of consumers -lacks incentives -large bureaucracy -little flexibility -discourages new and different ideas -rewards only productive resources -must guard against market failures 3 economic questions What? Based on tradition How? Same as past For Whom? Customs and traditions of sociey What? Central authority (govt) How? Central authority For Whom? Central Authority What? Individuals (consumers and producers) How? Individuals For Whom? Individuals

Characteristics of Free Enterprise and Capitalism Economic Freedom People choose jobs and spend $ Businesses choose what to make and sell and price Voluntary Exchange Buyers and sellers may engage freely and willingly in market transaction Private Property People may control their possessions as they wish Profit Motive People and organizations may improve their material well-being by making money

Assessment: Create three illustrations or comic strips that demonstrate the basic components of each of the economic systems. Once illustration or comic strip per economic system. Complete for HW and turn in tomorrow…