1. Economic Systems – Chapter 2, s1
Scarcity = unlimited wants but limited resources
Economic Systems create an organized way of solving the problem of SCARCITY
Economic Systems create a plan for answering the questions of What, How and For Whom to produce goods and services

2. Economic Systems – Chapter 2, s1
Traditional: ritual, habit and custom dictate how resources will be used; Native American, Amish, Eskimo
Command: a central authority (government/one rules/committee) decides how to use resources; Cuba, North Korea
Market: individuals and firms (buyers and sellers) act in their own best interests and make decisions about resources; no pure market systems exist, but US and Europe are based on market economics

3. Traditional Economy - customs

4. WHO / WHAT DECIDES WHICH ECONOMIC PRODUCTS TO PRODUCE?
Traditional: ritual, habit and custom dictate what to produce
Command: central authority / government / dictator decides what to produce
Market: individuals and firms – buyers and sellers – decide what to produce

5. Command Economy - government

6. WHO / WHAT DECIDES HOW ECONOMIC PRODUCTS WILL BE PRODUCED
WHO / WHAT DECIDES HOW ECONOMIC PRODUCTS WILL BE PRODUCED? (the management and use of resources)
Traditional: ritual, habit and custom dictate how to produce EPs
Command: central authority / government / dictator decides how to produce EPs
Market: individuals and firms (buyers and sellers) decide how to produce EPs

7. Market Economy – individual choice

8. FOR WHOM TO PRODUCE IT?
Traditional: Ritual, habit or custom determines who gets what – based on the way it’s always been done; no consumer choice
Command: a central authority (government/one rules/committee) decides who gets what; little or no consumer choice
Market: consumers choose what they want to buy, and sellers respond accordingly (or fail)

9. NAME THAT ECONOMIC SYSTEM…

10. STRENGTHS - Benefits
Traditional: stable; predictable; everyone has a role
Command: can change quickly, once government decides to change; “good government” may provide for all
Market: individual freedom; variety of goods and services; happy consumers; Laissez-Faire

11. WEAKNESSES - Costs
Traditional: discourages new ideas; lack of progress, no new technology; no choice
Command: little or no choice; discourages new ideas unless “approved” by government; little incentive to work – all workers treated the same
Market: rewards only productive resources - only the workers; those who are sick, old or too young to work have nothing

12. Successful Market Systems require:
COMPETITION – keeps quality high and prices low
Resources Must be TRANSFERABLE – people need to be able to change jobs; producers need to be able to change methods / goods / services; adaptable
INFORMATION – everyone needs access to the same information to make informed choices as buyers and sellers; no unfair advantages