Mr. Hicks Ms. Tschudi-Rose 26 January 2011

 WHAT to produce?  HOW to produce?  FOR WHOM to produce?

 Economic Efficiency Make the most of your resources  Economic Freedom Freedom from government intervention  Economic Security and Predictability Good/services will be available, payments made on time, and a safety net  Economic Equity Fair distribution of wealth  Economic Growth and Innovation Innovation and higher standard of living  Additional Goals IE: environmental protection, full employment, universal medical care, etc.

 Traditional Economy Relies on habit, custom, or ritual  Market Economy Decisions on production/consumption are based on voluntary exchanges in the market  Command Economy Central authority is in command of the economy  Mixed Economy Elements of Market-based economic system with varying levels of government involvement

STRENGTHSWEAKNESSES -Everyone knows their role Security - Discourages new ideas and new ways of doing things- inefficient - certainty exists over WHAT and HOW to produce -Security - Possible punishment for breaking rules or acting differently-lacks freedom - FOR WHOM = traditions/customs-Lower standard of living -No growth -Life is generally stable, predictable, and continuous -Basic needs are met EXAMPLES: Inuit, small communities around the world, Amish

STRENGTHSWEAKNESSSES - Adjust to change over time Efficiency - FOR WHOM (rewards go to the most productive resources) - Freedom exists for everyoneless equity Gov’t involvement is limited to protecting property and providing public goods: Growth Basic needs not met for all -Decision making is decentralized -Freedom/ consumer sovereignty - Variety of goods and services - High degree of consumer satisfaction (consumer sovereignty) EXAMPLES: United States, Hong Kong, Mexico, Canada, Japan There are NO PURE Market economies, but these are the closest.

STRENGTHSWEAKNESSES - Can change direction in a relatively short time - Not designed to meet individual wants/needs no consumer sovereignty Equity- all needs are met- Lack of incentives no profit motive or competition - Requires large decision-making bureaucracy ; lacks efficiency -No flexibility to deal with minor day- to-day problems lacks efficiency - People with new/unique ideas can’t get ahead ( no profit motive) EXAMPLES: North Korea, Cuba, Iran, Communist China, former USSR

STRENGTHSWEAKNESSES Varying levels of gov’ t interference*- Difficult to transition from centrally planned to free market -High level of economic freedom -More equity, basic needs help -Safety net for all - Not enough involvement from the government vs. too much involvement already - Foreign investment/free trade are encouraged *The government will use influence to keep order, provide vital services, and to promote the general welfare. EXAMPLES: All modern economies

FREE MARKET CENTRALLY PLANNED Hong Kong U.S.Mexico France China North Korea Singapore U.K. South Africa Iran Cuba CanadaPoland Japan Russia

               