1. Economic Understandings
SS6E5: The student will analyze different economic systems
A. Compare how traditional, command, and market economies answers questions of 1-what to produce, 2-how to produce, and 3-for whom to produce

2. Economics – the social science that analyzes the production, distribution, and consumption of goods and services.

3. Scarcity - Is the limited supply of something. Or…
Limited resources < Unlimited wants
Unlimited wants > Limited resources
Scarcity forces people and governments to make choices.
Every country must deal with the problem of scarcity. As a result, every country develops an economic system. In each type of economic system, 3 key questions MUST be answered…

4. Private Ownership
the fact of being owned by a private individual or organization, rather than by the state or a public body

5. 3 Key Economic Questions:
What goods and services to produced
How will these goods and services be produced
Who will consume these goods and services

6. 3 Types of Economic Systems
Traditional
Command
Market

7. 3 Types of Economic Systems
Traditional Economy – When customs and habits of the past are used to decide what and how goods will be produced, distributed, and consumed.
Every member of society knows their role early on in life

8. Jobs are handed down generation to generation
People are to fulfill their traditional role
Little change takes place over time
Families answer the 3 key Economic Questions
Exp: farming, hunting/gathering, and cattle herding…often found in underdeveloped or 3rd world countries

9. 2. Command Economy – Government makes the basic economic decisions.
Government determines what goods and services to produce, prices, and wages
Government owns most businesses.
Government answers the 3 key economic questions

10. Workers and businesses are told how much to produce by the government… this is called a Quota
If all quotas are met, the people will have what they need, when they need it
Government owns and controls many large businesses and has limits on private ownership
Exp: Former Soviet Union and Communist China

11. 3. Market Economy – Buyers (consumers) and sellers (producers) control the economy. Other names for this type of economy include free enterprise, capitalism, and laissez-faire
Buyers & sellers answer the 3 key economic questions
Prices for goods and services are determined by supply - the amount of goods available…and demand – how many consumers want the goods

12. Mixed Economy Market + Command = Mixed
There are no pure command or market economies. To some degree, all modern economies exhibit characteristics of both systems and are often referred to as mixed economies.
Most economies are closer to one type of economic system than another.
Businesses own most resources and determine what and how to produce, but the government regulates certain industries.

13. Mixed Economy – Modern economies that share characteristics of BOTH a pure market and pure command economy
There are flaws to both command and market economic systems so most countries are not purely command or market...they are “Mixed”
In a market economy, there is a need for laws to protect workers, consumers, and businesses. These rules reduce freedom but protect those individuals
Exp: Minimum wage for the USA

15. SS6E5: The student will analyze different economic systems B
SS6E5: The student will analyze different economic systems B. Explain how most countries have a mixed economy located on a continuum between pure market and pure command

17. SS6E5: The student will analyze different economic systems
C. Compare the basic types of economic systems found in the UK, Russia, and Germany

18. United Kingdom’s Economy
Businesses are owned by people and corporations
People and corporations answer the 3 key economic questions
Buyers and sellers determine price
Property rights are protected by laws and court systems
Very easy to start your own business

20. Germany’s Economy Businesses are owned by people and corporations
People and corporations answer the 3 key economic questions but with some regulations by the government (Government regulates some agriculture, energy and telecommunications)
Buyers and sellers determine prices with the government regulating some prices
Property rights are protected by laws and court systems
Very easy to start your own business

22. Russia’s Economy
Government owns large industries (shipping, oils, gas) while private ownership is allowed in smaller areas
People and corporations answer the 3 key economic questions for smaller businesses but but the government controls the large industries
Courts do not always protect the rights of business owners
Takes a very long time to start your own business

24. Let’s See What You Know
You last name is Burke. They always make C’s….therefore, your grade will be a C also
TRADITIONAL

25. If you last name starts with a A – M, you will receive a B
If you last name starts with N – Z, you will receive an F
That is the law.
COMMAND