Bellringer Who decides how many shirts you buy when you go to the store? Who decides what you eat? Or What profession you will have?

SSEF4B EVALUATE HOW WELL EACH TYPE OF SYSTEM ANSWERS THE THREE ECONOMIC QUESTIONS AND MEETS THE BROAD SOCIAL AND ECONOMIC GOALS OF FREEDOM, SECURITY, GROWTH, EFFICIENCY, AND STABILITY. SSEF4 THE STUDENT WILL COMPARE AND CONTRAST DIFFERENT ECONOMIC SYSTEMS AND EXPLAIN HOW THEY ANSWER THE THREE BASIC ECONOMIC OF WHAT TO PRODUCE, HOW TO PRODUCE, AND FOR WHOM TO PRODUCE. Economic Systems

Economic System An Economic system is the method used by a society to produce and distribute goods and services.

Three Economic Questions Because economic resources are limited, every society must answer three key economic questions:  What goods and services should be produced?  How should these goods and services be produced?  Who consumes these goods and services?

What goods and services should be produced? Each society must decide what to produce in order to satisfy its needs and wants. Recall guns and butter trade-off

How should goods and services be produced? For example, should we produce electricity with oil, solar power or nuclear power? Regardless of the decision of how all require land, labor, capital. The factors of production can be combined in different ways.

Who consumes goods and services? How do good get divided up? The answer to question of distribution is determined by how societies choose to distribute income. Factor Payments the income people receive for supplying factors of production, such as land, labor, or capital.

Economic Goals and Values Economic Goals Economic EfficiencyMaking the most out of resources Economic FreedomFreedom from government intervention in the production and distribution of goods and services Economic Security and predictabilityAssurance that goods and services will be available, payments will be made on time, and a safety net will protect individuals in times of economic disaster Economic EquityFair distribution of wealth `Economic Growth and innovationInnovation leads to economic growth, and economic growth leads to higher standard of living. Other GoalsSocieties pursue additional goals, such as environmental protctions.

Market Economy Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets. Individuals the people in society answer the three economic questions. Also called free market or capatalism

Command Economy or Centrally Planned Economy Economic system in which the central government makes all decisions on the production and consumption of goods and services.

Mixed Economies Market based economic system with limited government involvement.

Traditional economy Economic system that relies on habit, custom, or ritual to decide questions or production and consumption of goods and services.

Assignment Create a chart that has three rows (one for each of the three basic economic questions) and three columns (one for each of the type of economic systems). In each cell, explain that a producer will take into account when answering the given economic question for the given economic system. What?How?For Whom? Traditional Command Market