1. Learning Objective:
Today I will be able to compare the advantages and disadvantages of different economic systems by creating a matrix chart.
Agenda
Learning Objective
Lecture: Ch. 2.1 Economic Systems
Matrix Chart
Vocabulary
Exit Slip

2. Title Notes: Ch. 2.1 Economic Systems
Pure Market
Pure Centrally Planned
Mixed Market
Define each of these concepts (as part of your Ch. 2 Vocabulary).
6 min. Pg

3. Economic system: mechanism or institutions that resolves the what, how, & whom question.
What goods & services will be produced?
How will they be produced?
For whom will they be produced?

4. Pure Market
Private firm (business) that controls all production. Government does not get involved. Also known as laissez-faire.
Advantages:
No gov. restrictions
No paying taxes
High profits for CEO’s & business owners.
Voluntary choices to buy & supply: invisible hand

5. Disadvantages:
Difficult to enforce property rights, contracts, or rules of the game
No min. wage/ income not guaranteed
Monopolies: one corporation owns all companies.
No Public Goods or Services
No parks or army, cause neither is profitable.
Externalities=cost outside of market transaction
Damages on environment not penalized by gov.

6. Pure Centrally Planned Economy
Government controlled & owns all resources used production. (communism) (visible hand)
Advantages:
Equal distribution of resources to the people
Ration living spaces & food.
Equal pay & no poor or rich
No such thing as the top 1%
Free health care & education (college)
People own & control economy
Communal ownership of all resources

7. Disadvantages: Consumers get low priority Little freedom of choice
Food shortages & scarcity
Little freedom of choice
Consumers can’t demand consumer goods or complain to customer service.
Inefficient production
Gov. sets supply goals, which could be inefficient: not enough or too much
Resources wasted
All resources belong to gov., people do not care to about preserving gov. property
Environmental damage unenforced.

8. Mixed Economy Advantages: Disadvantages: Public goods (from taxes)
Ex. Park, library, school, etc.
Workers rights protected & Unions
Wages & benefits are protected
Competition: compare prices for the cheaper price
Black Friday of course!!!
Disadvantages:
Competition: resources are scarce
Not all have equal opportunities
Paying taxes

9. Mixed Economies=Market Economies
Competitive market with mix of central (gov.) control.
Transitional market: Central (gov. controlled market) changing into  competitive markets

10. Pure Market = Laissez-Faire (no gov.)
Pure Centrally Planned = Communism
(gov. control)
Mixed Economy = Capitalism
(some gov. control)

11. Pure Centrally Planned
Instructions: Get an extra sheet of paper and draw this chart. Next, write the biggest advantage & disadvantage for each economic system in each designated box.
Economies
Advantages
Disadvantages
Pure Market
Pure Centrally Planned
Mixed/Market

12. Exit Slip
Which type of economy do you prefer? Explain why you prefer that type of economy?
The economy I prefer is____________________
because_______________________________.