Economic Systems 3 Basic Economic Questions What are
Economic Systems
3 Basic Economic Questions • What are we going to produce (make)? • How are we going to produce (make) it? • For whom are we producing (making the goods)?
4 Factors of Production • • Land: Provides (gives) the natural resources Labor: Provides the man power. Capital: Provides the equipment and tools to do the job Entrepreneur: The business person who provides the idea
Traditional System • Decisions based on traditions, customs, and beliefs. • No government control • Jobs handed down from generations to generations (jobs: farming, hunting and gathering, or herding) • Ex: poor/developing countries
Command System • Individuals have little influence over how economic decisions. • The Government has total control and decides which jobs individuals will have, how much they will make, and for whom they will produce (or make) the goods • Ex: mostly in Communist countries (ex: the old Soviet Union, North Korea, & Cuba)
Market/Capitalist System • The government does not get involved at all. • Ex: Most of Europe (has between a market and mixed economy; such as the United Kingdom) • Decisions are guided by changes in prices between buyers and sellers. • Supply-The amount of goods (things/resources) available • Demand-How many consumers (people) want the goods
Mixed System • The people and the government make the major economic decisions for a country. • There is some government control. • Ex: The United States and most other countries today
- Slides: 7