1. Economic Systems AN EXPLORATION OF TRADITIONAL, MARKET, COMMAND, AND MIXED ECONOMIES

2. J-Beib, there are only three seats open for my last concert and 4,000,000 people want to go to it. What should I do? Do what I do, Leeny. Instead of charging $45 a seat, you can charge $100,000 a seat. But snookums, no one in their right mind would pay that much for a concert ticket. Oh sweetlips, yes they will. It’s all about supply and demand. When the supply is low, like the number of seats at your concert, and the demand for those seats is high, you can charge a ridiculous amount because people will pay for it. Woah, baby, baby! NEVER nerd out like that on me again. Never say never again to my face. I think you’re just jealous because you don’t know economics. Economics is the study of supply and demand. You’re right. Economics is really cool! And it’s cool because you like it Justin.

3. Supply and Demand ● Supply- the amount of goods and service available for consumption by individuals in a society. ● Demand- the amount of individuals in society that wish to consume the goods and services available. http://www.youtube.com/watch?v= upIMfHFgWtQ

4. Scarcity ● What is scarcity? ● How does it apply to economics? ● What modern examples within our own economy can we think of as scarcity?

5. Opportunity Cost Giving up one thing for another. Example: James has $25.00. He wants to buy the new Ka$ha Cd but also needs a new pair of jeans. There is only one pair of jeans left in his size. James buys the jeans. What is his Opportunity Cost?

6. Opportunity Costs You have $100… How will you spend it? OR…

7. Economic Systems What To Produce How To Produce It How To Distribute It

8. Basic Economic Questions: What to Produce? How to Produce? For Whom to Produce? How a government answers these questions will dictate the economic system which is established within that government.

9. Traditional Economy Based on custom or tradition. Bartering is used to trade goods. People do the same work that their family or people have always done— handed down from generation to generation.

10. Market Economy As long ago as ancient Egypt humans began to use forms of money to trade for goods and with the free trade of goods arose what is now known as the market economic system. I will sell it to you for five gold pieces. Five pieces of gold?! Holy Ra! That’s a rip off!

11. Market Economy Sup ply Dema nd

12. Market Economy Sup ply Dema nd

13. Market Economy Sup ply Dema nd

14. Market Economy Why is gold so expensive? 1 ounce gold = $1,670

15. Market Economy Why is Bazooka bubble gum so cheap? 1 piece of gum = 5¢

16. Traits of Market Economies Entrepreneurship and risk taking are rewarded with big financial gains. Private property rights are strictly enforced even when they result in many poor people and few very wealthy people. Producers decide what to produce based on consumer tastes and demands. Productivity results in more personal wealth Government’s role in the economy is limited The economy is based on almost entirely on supply and demand Private individuals and companies own businesses and industry V. We have all the power!!!! Yeah, right!! Who do you think put you there?? We can totally take you out of office!

17. Criticism of Market Economies Unequal societies with a few very wealthy individuals and many poor individuals. Market economies often encourage free trade that enables large private companies to exploit the laborers or the resources of less-developed nations. Market economies often result in economic monopolies (when one company controls a business sector) that stop competition and result in higher prices

18. Everyone wants to choose Wendy’s burgers! That’s crap! Everyone knows that McDonald’s burgers are #1 in America. People will obviously choose ours! But our burgers are cheaper AND they taste better! Bogus assertion and you KNOW IT! We have a dollar menu and like I said, voted #1 in America :P You may have that dollar menu, but we have way MORE on our dollar menu AND we have more selection in our meal choices. People will obviously choose us! BRING IT! Not only are we #1 in America, we have $1 soda ANY size. Who can beat that? I rest my case! Where should we go for lunch today?

19. Characteristics of Capitalism Freedom of choice and individual incentive Any productive economic activity that free individuals choose Characteristics Private ownership and control of resources Free enterprise Competition among businesses Freedom of choice The possibility of profits

20. The U.S. and Capitalism Free Enterprise: Not entirely. Government regulates foreign trade and owns property Governmental Influence: Has increased over time. Today government is the single largest buyer of goods Regulates the economy for various reasons Has set up many organizations to help people get jobs and perform other social functions Mixed-Market Economy: America Free enterprise is combined with government decisions and support in the marketplace

21. Command Economy Typically begins with a revolution The government controls all aspects of the economy Private property is illegal Supply and demand are determined by the government, not by consumers and producers. Everyone is paid equally no matter what job they do. Industry and businesses are owned and controlled by the government, not private individuals. Two types: Communism and Socialism We control EVERYTHING!! And there’s nothing you can do about it! Muahahahahah a!! IS ILLEGAL PUBLIC OWNERS ONLY

22. Socialism We are supreme!! We control production! We determine the use of resources! We distribute products and wages! We provide social services like education! We also provide social services like health care and welfare!

23. Socialism 3 Main Goals: The distribution of wealth and economic opportunity equally among people Society’s control of all major decisions about production Public ownership of most land, factories and other means of production

24. Criticism of Command Economies Inefficient and rewards unproductive workers. Since workers are awarded the same amount of money for doing every job, workers aren’t productive. Result in black markets. Cease to stay competitive in the world because competition and entrepreneurship is discouraged.

25. Mixed Economy Exist somewhere between command and market economies. The government tends to own major industries like utilities, health care and major manufacturing industries Individuals own most small businesses. Tax their citizens more than market economies, but less than command economies. To provide all citizens a social safety net such as welfare, free university tuition and free health care.

26. Criticism of Mixed Economies Often result in unproductive workers because there is not as much incentive to work hard as there is in a market economy. Often suffer from higher unemployment rates and lack the same number of entrepreneurs as market economies. Often must raise taxes in order to sustain all of the social services such as welfare, free health care, low cost university education and pension systems for the elderly which can lead to a stagnant economy.

27. Examples of a Mixed Economy France health care is free, university costs very little if you get in (many do not) and taxes are high. However, there are also private industries based out of France like Air France and Puegot. United Kingdom health care is free, university is cheap, but citizens can purchase private health insurance and attend private universities if they choose. United States the federal government owns much land in the West and private ranchers are allowed to graze their cattle on that land.