ECONOMIC SYSTEMS DECISION MAKING WHAT IS AN ECONOMIC
- Slides: 14
ECONOMIC SYSTEMS & DECISION MAKING
WHAT IS AN ECONOMIC SYSTEM? All countries use economic systems. An economic system is simply an organized way for providing for the wants and needs of the people. Three major economic systems exist.
TRADITIONAL ECONOMIES: In a society with a traditional economy, the use of scarce resources and nearly all other economic activity stems from ritual, habit or custom. Individuals are not free to make decisions. Rather, their roles are defined by the customs of their elders and ancestors.
ADVANTAGES/DISADVAN TAGES: Advantages: Everyone knows what role to play Disadvantages: Tends to discourage new ideas and ways of doing things Also, individual freedom is limited Lack of progress can lead to economic stagnation and a lowered standard of
COMMAND ECONOMY: In a command economy, a central authority makes decisions about WHAT, HOW & FOR WHOM to produce. In a pure command economy, the government makes all of the major economic decisions.
ADVANTAGES/DISADVAN TAGES: Advantages: The main advantage is that it can change direction drastically Disadvantages: Ignores basic wants and needs People are more interested in filling a quota than producing a good product Requires a large decision-making
DISADVANTAGES CONTINUED The planning bureaucracy lacks the flexibility to deal with day-to-day problems Rewards for individual incentive are rare
MARKET ECONOMY: In a market economy, people make decisions in their own best interest. In economic terms, a market is an arrangement that allows buyers and sellers to come together to exchange goods and services.
CHARACTERISTICS: A market economy is characterized by a great deal of freedom. A market economy is often based on capitalism—an economic system where private citizens own the factors of production.
ADVANTAGES/DISADVAN TAGES: Advantages: High degree of individual freedom It adjusts gradually to change over time Small degree of government interference Decision-making is decentralized Variety of goods & services High degree of consumer satisfaction
DISADVANTAGES: Disadvantages: Does not provide for everyone May not provide enough basic goods & services High degree of uncertainly
MIXED ECONOMIES Most countries have mixed economies— systems that combine elements of all three types. One advantage of a mixed economy is that it provides assistance for some people who might otherwise be left out. One disadvantage is higher costs for citizens to provide these services.
THE SPECTRUM OF MIXED ECONOMIES:
- Chapter 2 economic systems and decision making answer key
- Chapter 2 economic systems and decision making
- Chapter 2 economic systems and decision making answer key
- No decision snap decision responsible decision
- Investment decision financing decision dividend decision
- Chapter 1 section 3 economic choices and decision making
- How do information systems aid in decision making
- Decision support systems and intelligent systems
- Chapter 1 lesson 2 our economic choices worksheet answers
- Decision table and decision tree examples
- Youth involvement
- Ethical rules screen nasw code of ethics
- Systematic decision making process
- Paced decision making
- Using recursion in models and decision making