1. Command vs. Market Economies, 1/25 WARM UP
What is this picture saying about the differences between North and South Korea?

2. What are command and market economies?
Command /centrally planned economies…
Market economies…

3. North Korea and South Korea
Korea was a unified country until the end of WW2
After the split, North Korea became a communist country with a command economy
South Korea became a democratic republic with a market economy

4. South Korean Industries

5. North and South Korea North Korea South Korea GDP: $40 billion
$1.268 trillion
GDP per capita: $1.800
$31,220
Rank in Global Economy: 125
Rank in Global Economy: 15
North Korea Economy Explained
South Korea Economy Explained
HOW THE WORLD SEES NORTH KOREA

6. Send a letter across the DMZ
Write a letter to your Korean counterpart about daily life in your country.
Include
Your job, overall happiness, your view of the government
Questions about your neighbor’s country

7. Market Economies, 1/29 Warm Up
Trace the story of the $5 bill from beginning to end in this situation:
Where did that $5 bill come from?
Where will it go?
And after that?
(Don’t copy Q, simply answer it in a complete sentence)

8. In your notebooks…
COMMAND ECONOMIES
MARKET ECONOMIES

9. Command Economies
Centrally planned economy

10. Command Economies
Government determines what, how and for whom things will be produced

11. Command Economies
Who is Karl Marx and what did he have to do with Socialism and Communism?

12. Command Economies Today
No pure command economies today
modern telecommunications bringing about change

13. Command Economies Disadvantages
central planners do not understand local conditions
inefficient
Shortages
Few choices

14. Market Economies FEATURE 1 Private property rights protected by law
Relationship between buyers and sellers organized in markets

15. Market Economies FEATURE 2: Laissez faire Capitalism
Producers create goods according to demand
some government involvement

16. Market Economies FEATURE 3: Voluntary Exchange in Markets
Profit

17. Market Economies FEATURE 4: Competition
According to Consumer sovereignty who controls what is produced?
Competition checks producers and buyers

18. Market Economies
FEATURE 5: Specialization How does specialization benefit consumers?

19. Market Economies Advantages Individuals free to make economic choices
Political Freedom
Profit rewards hard work

20. Hand over your paycheck punk!
Market Economies
Hand over your paycheck punk!
Disadvantages
Does not give security to sick or aged
Businesses did not address problems caused by industrialization

21. That’s why America is freaking awesome.
Mixed Economy
A combination of pure and centrally planned economy
The US is a mixed economy
Government only steps in when needed but is mostly hands off
OSHA, federal minimum wage, zoning

22. Market Economies KEY CONCEPTS
Circular flow model illustrates how interactions occur in a market
SEE PAGE 53

23. Circular Flow Model Product Market Firms Factor Market Households
(this is just an economist’s fancy way of showing you that you earn money, spend money, and it’s all just a circle of life)
Product Market
Firms
Factor Market
Households

24. Circular Flow Model Homework Assignment
Create a Circular Flow Model using your own example of economic activity (i.e. buying a new iPad)
Must be colored
Must be neat
Worth 20 points
DUE TOMORROW