12 Market Economy It is all about the consumer and individual choice As a consumer you make decisions based on you own economic interests.
13 Advantages of a Market Economy High degree of individual freedomRelatively small degree of government interference (Mixed Economy)Seemingly unlimited variety of goods and services available to the consumers.
14 Disadvantages of a Market Economy The government does not provide for the basic needs of everyone.The government does not provide certain services that people value.
15 Which Economic System Are We? Mixed EconomyCapitalismBased on 4 Important Principles- Private Property- Freedom of Choice- Profit- Competition
16 Fundamentals of a Market Economy Private property rights - rights of individuals and groups to own property.Market – any place or situation in which people buy and sell resources and goods and services.Property rights are enforced by lawWould this system work if buyers could not trust sellers?
17 Limited GovernmentLaissez faire – French term meaning “leave things along”.Should the government leave the markets alone?How does the government protect people from the market?
18 Voluntary ExchangeTwo parties involved make an exchange usually a good or service for money.This is guided by self interest
19 Consumer has the power A consumer can buy whatever they want. This creates competition within a marketSelf Interest – Both the buyer and seller use self interest to get what they want.
20 Specialization People do what they do best A teacher can make money by teaching but how can he or she get groceries for the week.Instead of growing them we go to the store with money earned by teaching and buy groceries.
22 This shows how households and business meet in a market economy.
23 Product Market Market for goods and services The suppliers of this market are businessesThe goods are sold for money (profit) which keep the businesses going
24 Factor MarketThis market is where businesses go to get things for productionThis means the factors of production.We are included in this. We are the laborers, land owners, owners of capital.We get income for doing thisFirms get resources from the product market which are used to produce goods.
25 Mixed Economy Most common economic system in the world. It has elements of all three systemsIn a mixed economy one of the three systems dominates and is the most prevalent in that economy.The U.S. is a mixed economy, which of the three systems does the U.S. use the most?
26 How does the U.S. use each system? TraditionalCommandMarket
33 Sweden Government pays for… Child care ages 1-5 School ages 6-16 More schooling and college if you want to goHealth careDentalPensionsTime off for raising a family
34 Sweden How do they pay for this? Citizens in Sweden pay about 60% of their income in taxes.
35 Politics of A Market Economy Politicians need your voteAn almost endless amount of research goes into how people are likely to vote based on who they are, and how they live.If the researchers do their job correctly they will know who you will vote for before you enter the booth.