3 Outline of Topics 1.1 What Economists Do 1.2 Economic Choice 1.3 The Production Possibilities Model1.4 Economic Systems
4 1.1 What Economists Do The Economic Problem Economists deal with the economic problem.Economic agents must continually make choices.Their wants are unlimited.They face a limited supply of economic resources.Economic resourcesincluding natural, capital, and human resources ( see Definitions on page 3)
14 1.4 Economic Systems There are three systems to choose from: Traditional Economy: an economic system in which economic decisions are made on the basis of custom.Traditional economies focus on non-economic concerns and have tight social constraints.
16 1.4 Economic Systems Drawbacks: Inequities of income distribution Possible market problems: eg, pollutionPossible Instability of total outputCommand Economy: an economic system based on public ownership and central planning.Benefits:Distribute income equallyEconomic growth
17 1.4 Economic Systems Drawbacks: Planning difficulties Inefficiencies A lack of freedom.