ECONOMIC SYSTEMS THREE BASIC ECONOMIC QUESTIONS 3 4
ECONOMIC SYSTEMS
THREE BASIC ECONOMIC QUESTIONS 3. 4. 1. What to produce? 2. How to produce? For whom to produce? How will the system accommodate change? 5. How will it promote progress?
ECONOMIC SYSTEMS 1. TRADITIONAL ECONOMY: nearly all economic activity is determined by ritual, habit, or custom. *Roles defined by customs of ancestors. *Skills passed from generation to generation.
ECONOMIC SYSTEMS 2. MARKET ECONOMY: people and firms (companies) act in their own best interests to decide WHAT, HOW & FOR WHOM *In a M. E. people cast “dollar votes” when they buy products. This determines WHAT is produced.
MARKET SYSTEM Characteristics of a Market System: 1. Private Property 2. Freedom of Choice and Enterprise 3. Competition 4. Self-interest and Profit motive 5. Specialization / Division of Labor 6. Technology (achieve greater efficiency) 7. Limited Government Involvment
ECONOMIC SYSTEMS. COMMAND ECONOMY: a central authority decides WHAT is produced, HOW it is produced, and FOR WHO. *Economic decisions are made at the top & people are expected to follow *resource usage and production quotas are pre-determined
Inside North Korea Clip
YOUR ASSIGNMENT v Create a graphic organizer that a) lists the 3 economic systems b) includes a short description of each c) explains who or what determines WHAT is produced in each economic system d) lists the strengths and weaknesses of economic system (pg. 26 -27) each
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