1. Economic Systems

2. Traditional Command Market

3. Objectives Identify three questions that all economic systems must answer. Describe a traditional economy Describe a command economy Describe a market economy Explain how most economies have a mixed economy located on a continuum between a market and command economy

4. Vocabulary Break Economic System the system of production and distribution and consumption

5. Three Economic Questions What to produce? How to produce? For whom to produce?

6. Traditional A traditional economy is shaped largely by customs and religion. Economic questions are answered by what happened in the past. Traditional economies are mainly found in rural areas.

7. What to produce?-Traditional Just what is needed to take care of self

8. How to produce?-Traditional How it was produced in the past

9. For whom to produce?-Traditional Self and one’s household

10. Positives of a traditional economy Predictable  Knowing what your job will be  Knowing the way you will live

11. Problems with a traditional economy Lack many resources Only produce enough to live on

12. Command In a command economy the government answers the three basic economic question Sometimes called communism

13. What to produce?-Command What the government determines

14. How to produce?-Command Government says how to produce

15. For whom to produce?-Command Citizens regardless of market demand

16. Positives of a command economy Because the government makes the decisions, people don’t have to worry about employment, housing, education, and healthcare

17. Problems with a command economy Consumers get low priority Little freedom of choice All resources are owned by the government

18. Market In a market economy, buyers and sellers answer the three economic questions. All resources are privately owned

19. What to produce?-Market Producers and consumers Whatever the market demands that will produce a profit

20. How to produce?-Market By private producers

21. For whom to produce?-Market Consumers who demand the product and are willing to pay

22. Positives of a market economy People can start their own businesses People have choice

23. Problems with a market economy The desire for money may lead to poor quality of goods and services Business owners have to risk losing money

24. Vocabulary Break Continuum A continuous seamless series. A link between things that gradually and seamlessly connects. It is impossible to say where one becomes the next.

25. Continuum of Economies Most Individual freedom No Individual freedom Pure Market Pure Command Most economies fall in between a pure market and a pure command economy on the continuum