LESSON 1-3 Economic Systems Goals Identify the three economic questions. Differentiate among the main types of economic systems. Describe the economic system of the United States. Chapter 1

Key Terms economic system command economy market economy traditional economy mixed economy capitalism Chapter 1

THE THREE ECONOMIC QUESTIONS What to produce? How to produce? What needs and wants to satisfy? Chapter 1

Types of Economic Systems Command Economy Market Economy Traditional Economy Mixed Economy Chapter 1

Command Economy Resources controlled by the government Government decides what and how goods are produced How much of the resources will be used How the resources will be used to produce capital goods Chapter 1

Market Economy Resources are owned and controlled by the people of the country The three economic questions are answered Marketplace is anywhere good and services exchange hands Chapter 1

Traditional Economy Goods and services are produced the same way they have been for generations Usually used in less developed countries They will consume most of what they produce, sell/trade/barter the rest Chapter 1

Mixed Economy Combination of the command and market economies Chapter 1

TYPES OF ECONOMIC SYSTEMS Command economy Market economy Traditional economy Mixed economies Chapter 1

THE U.S. ECONOMIC SYSTEM Private property Freedom of choice Profit Competition Chapter 1

Private property A citizen can own, use or dispose of things of value Own anything you want as long as it does not break the law If you invent something of value you are protected from others taking your idea Chapter 1

Freedom of choice You make the decisions independently and you must accept the consequences of those decisions Chapter 1

Profit The money that is left over after all of the costs of operating the business has been paid Chapter 1

Competition Consumer have the choice of buying the same product designed and developed by multiple companies Increases the quality of products Decreases the price of products Chapter 1

>> C H E C K P O I N T Name the four principles of the U.S. economic system. Chapter 1

LESSON 1-4 Supply and Demand Goals Describe supply and demand orally and with graphs. Discuss how supply and demand affect prices of products and services. Chapter 1

PARTICIPATING IN A MARKET ECONOMY Consumers set demand Producers establish supply A graphic view Chapter 1

DEMAND AND SUPPLY Chapter 1

>> C H E C K P O I N T How does the price of a product affect demand and supply? Chapter 1

DETERMINING PRICE Factors influencing demand Factors influencing supply Determining market price SUPPLY IS HIGH, DEMAND IS LOW PRICE IS LOW SUPPLY IS LOW, DEMAND IS HIGH, PRICE IS HIGH Chapter 1

MARKET PRICE Chapter 1

>> C H E C K P O I N T How is the market price for a product determined? Chapter 1