1. Economic Systems

2. Basic Questions to ask yourself.
1. What goods and services should be produced? How many of the good should be produced?
2. How should the goods be produced?
3.Who are goods distributed to?
This all depends on the type of economic system.

3. Definitions Factors of Production
Items necessary to produce goods
Who can name them?
Land
Labor
Capital (money, buildings, equipment, etc.)
Services: Having a task or job done for you.
Getting car fixed
Goods: Products you can hold, own or touch. Two types:
1) Durable goods: Items you will have for a long time (i.e. Cars, Washing Machines, and TVs)
2) Nondurable goods: Items that are consumed quickly (i.e. T-shirts, pens, food)

4. Traditional Economies
Tradition and customs decide what an individual does for his living, so industry, clothing and shelter are the same as in previous generations.
roles of individuals are clearly defined.
found in rural, non-developed countries
Cons: societies are often very slow to change when new technology is introduced, these ideas and techniques are discouraged

6. Market economies
Economic decisions are made by individuals competing to earn profits
Resources are owned and controlled by individuals
Supply and demand
great variety of goods and services for consumers
there is a demand for a good, the someone will produce it
Laissez-faire
Government stays out of the way (hands off)
Capitalist

8. Command economies
The government makes decisions and determines how resources will be used
There is little individual freedom
Consumers have few choices in the market place
The government dictates the job in which you work
The government sets the prices of goods and services
Inefficient b/c the Government is slow to respond to market changes.
Ex. Cuba, North Korea and the People's Republic of China

9. Mixed economies All three mixed into one
Individuals and government are both decision makers
Individuals own means of production
Gov. protects consumers and workers from unfair policies