How the Government influences how I make money. Economic Systems How the Government influences how I make money.

Quick Review: What are Goods? What are Services? What are Resources? What is Scarcity?

Economic Systems Def. The method used by a society to produce and distribute goods and services. Or, How the government tells us what we can get and how to get it!

All Economic Systems Must Consider the Following Questions: What goods and services to produce? How will they produce them? Who will get them? How much will they produce now, and how much later? For Whom to produce for? Each economic system answers these questions in a DIFFERENT WAY.

Types of Economic Systems There are 3 basic types of economic systems.

1. Traditional Economy Economic questions are answered by habits and customs (the way it has always been done, do what ancestors did.) Children work the same jobs parents worked, often farming or hunter/gatherer Ex. Eskimos, the Amish, , Bush People

2. Command Economy The government answers the basic economic questions Advantages: able to act quickly in emergencies, provide for all people equally Disadvantages: Inefficient, no incentive to work hard or be creative Ex. Communist Countries (China, Vietnam, North Korea, former Soviet Union, Cuba)

3. Free Market Economy Economic questions are answered by individual buyers and sellers. Supply and demand influence economy People act out of self interest; motive for profit (money) drives the economy Also known as FREE ENTERPRISE or CAPITALISM Ex. The United States, Western Europe, Japan

4. Mixed Economy Mixed Economy: No economy is pure market, pure command or pure traditional, elements of each appear in all economies, some have more elements of one economy than another. Market Mixed Command USA Great Britain China

Can you identify the economic System? My name is Heraldo Esterez. I have lived in Cuba all my life. I wanted to become a teacher. However , I work for a large sugar producer that is owned by the government. The government decides when I work, where I work, and how much money I receive. What economic system am I describing? Command Economy

Identify Economic Systems My name is Curt Jones and I have always had a passion for delicious ice cream. I discovered a way to freeze ice cream into small dots. I patented the process for making the ice cream and built a plant to make enough ice cream to sell it internationally. Which economic system am I describing? Market Economy

Identify Economic Systems My name is Mr. Jones and I have always had a passion for delicious ice cream. I discovered a way to make ice cream that formed tiny dots. I patented the process for making the ice cream and built a plant to make enough ice cream to sell internationally. I decided to build Kiosks, carts to store and sell ice cream, to dealers nationally and internationally. The Kentucky Health Department told me that each Kiosk that stays in Kentucky must have three sinks. The Health Department in California requires that all the Kiosks have four sinks in them. Which economic system am I describing? Mixed Economy

Identify Economic Systems I am a basket maker in India. The people in my village make beautiful baskets. My grandmother and my mother made baskets. What type of economic system am I describing? Traditional Economy My name is Whitney Smith. I own a toy factory. My employees use many sharp instruments to make the toys. A federal agency called O.S.H.A. (Occupational Health and Safety Administration) visits my factory often to make sure my employees have the safe equipment to use. Which economic system am I describing? Mixed (Free Market & Command)

Identify Economic Systems My name is Derek Jones. I am an engineer. My father and grandfather are engineers also. Which economic system am I describing? Traditional Economy My name is Madison Brown. I worked for an ice cream company for many years. I am now 65 years old and have health problems that prevent me from working. I receive a Social Security check each month to help pay my expenses. What economic system am I describing? Mixed Economy