TYPES OF ECONOMIES

WHAT EVERY ECONOMIC SYSTEM MUST ADDRESS? 1. WHAT to produce? 2. HOW to produce it? Which resource combinations to use? How to distribute it among the system’s members? 3. FOR WHOM to produce?

SCARCE RESOURCES vs. UNLIMITED WANTS

ASPECTS OF EFFICIENCY (efficiency = the quality of doing something well and without wasting time, money, or energy) distribution of resources choice cost quality stability growth long-term interests

TYPES OF ECONOMIES 1. COMMAND OR PLANNED ECONOMY 2. MIXED ECONOMY 3. FREE MARKET ECONOMY

PLANNED ECONOMY resources belong to the state (planned by the state) role of government vital ( plans and organises the whole production) production for need rather than profit standardised goods, little choice more equal distribution of wealth and income workers less motivated but - safe jobs

MIXED ECONOMY resources allocated by government (the public sector) and by the market forces of demand and supply (the private sector) role of government depends on the level of development, provides a minimum standard of living, ensures fair competition / a level playing field production of public goods paid by taxes, all private sector production for profit

FREE MARKET ECONOMY resources allocated automatically market mechanism (demand & supply) role of government limited (pass laws, essential products and services like policing, national defence, the judiciary) unequal distribution of income production only for profit planning and organising carried out by firms

Disadvantage: a huge rift between the wealthy and the poor

1. RB: p 29: FILL IN THE GAPS IN THE TEXT

2. RB: p 17: a) ADVANTAGES OF FREE MARKET ECONOMIES: ____________________________________ B) DISADVANTAGES OF FREE MARKET ECONOMIES: _____________________________________ C) ADVANTAGES OF PLANNED ECONOMIES ______________________________________ D) DISADVANTAGES OF PLANNED ECONOMIES

RB: p: 29 INSERT THE MISSING WORDS:   Some theorists were for less government _________________ and more reliance on the ________________ . The basic government role is in _____________________ unemployment. As communism _______________, many countries turned towards _______________ economies. State _____________ were sold to private _______________ . The central planners lost their control over __________. ___________ and ______________ were no longer guaranteed by the state.

3. FIND OUT THE DIFFERENCES BETWEEN THE TWO TYPES OF ECONOMIES: http://www.youtube.com/watch?v=6q3zjyG8Dpg&feature=related Market economy Planned economy ________________________ _______________________ ________________________ _______________________

4. FILL IN THE MISSING WORDS BELOW: laws, limited, quality, demand, goods, supply, motivated, services, allocated, standard, prices, competition, vital, range, needs In market economies resources are ________________ automatically by the forces of __________________and _____________________. Competition leads to lower _______________, a wider ______________________of goods, goods and services are better ____________.The role of government is _____________: to pass ________, to provide certain ___________and ______________and ensure fair ______________. In planned economies government has a ______________role. Production is for ________________rather than for profit, people are less _______________to work efficiently and the _________ of living is lower.

5. Explain the following words: 1. Traditional economy = http://www.youtube.com/watch?v=BfoQ4S_QOPQ&feature=related Explain the following words: 1. Traditional economy = 2. Manorialism = 3. Mercantilism = 4. Laissez faire capitalism = 6. Command economy =