1. Economic Systems Chapter 1 Summary Pgs. 5 – 6

2. Economic Systems Recall our 3 questions:
What to produce?
How to produce it?
For whom to produce it?
How does an economy as a whole answer these questions?
Every economy has developed it’s own system

3. Cont. Every system is unique to the people/country that developed it
There are similar categories
Traditional (Barter)
Command
Market
Mixed

4. Traditional Economy These are extremely uncommon today
Generally to be found among undeveloped civilizations.
People/families do what they always have
Exchange of goods/services to get what you can’t make/do
These communities tend to be very poor

5. Command Economy Public vs. Private Sector
Public – Factors of Production owned by the government, they answer the 3 questions
Private – Factors of Production owned by individuals, households & firms, they answer the 3 questions
Command is entirely public sector
This has never really happened

6. Market The economy would be 100% private sector.
The government has no say/control over any of the Factors of Production
Even the US doesn’t meet this criteria

7. Mixed Every modern economy is considered a “mixed economy”
There is both public & private control of resources
Some countries lead more one way or another

8. Mixed – leaning command
Cuba, N. Korea, China, Vietnam & former USSR

9. Mixed – leaning market
U.S., Japan, Canada, Europe…

10. Mixed – middle
Sweden, Norway, France – more socialist…

11. Summary Economics is the study of choices
Choices made by individuals, households/families, businesses & organizations and governments
All choices are influenced by scarcity, opportunity costs & access to the factors of production