1. Making and talking slides → RB, p 89 I Compare IIOrganize the first slide for the talk on p 86 III Study and do p 90 (graphics) HW: Draft slides for the talk on p 86 or p 87 (max.5) Study III, p 89

2.  Handout – spot the mistakes Scarcity is the fundamental challenge confronting all individuals and nations. We all face limitations... so we all have to make choices. How we deal with these limitations is the basic economical challenge. Societies have developed different broad economic approaches to manage their resources. Economists generally recognizes three basic types of economic systems. (7)

3. In a command economic system or planned economy, the government controls the economy. The state decides how to use and distributes resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system. The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late 1980s lead to the demise of many command economies around the world; Cuba still continues to hold on to its planned economy. (7)

4. In market economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources—what training to pursue, what jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs. The United States in the late nineteenth century, at the height of the laissez-faire era, was about as close as we've seen to a pure market economy in modern practice. (8)

5. A mixed economic system combines elements of the market and planned economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources. The United States today, like most advanced nations, is a mixed economy. The eternal question for mixed economies is just what the right mix between the public and private sectors of the economy should been. (6)

6. “The eternal question for mixed economies is just what the right mix between the public and private sectors of the economy should be.” Explain: “The market has a keen ear for private wants and a deaf ear for public needs.”

7. The Public Sector → RB, pp 34-35: tasks II, III, IV Task V Describe the public sector using the following verbs: make upown control fund provide argue

8. Describe public goods using the following nouns/noun phrases: public sector consumption amount all individuals Describe merit goods using the following phrases: not available provided by the state standard of living

9. Do governments have too much power? If so, do they interfere with market forces? Is the public sector too big? Which of the following activities could be left to the private sector in Croatia?MK, p 109 Education Health care Low-income housing Defence The police, the justice system, prisons Public transport Social security (unemployment & sickness benefits, old age pensions) Working conditions (working hours, child labour...) Health, safety and cleanliness regulations

10. The role of government Free to Choose by Milton and Rose Friedman opinion of the activities of the US govt. What do you expect? Reading  MK, p 109-110 Read the text & answer the comprehension questions. Make a list of examples they provide. How far do you agree with them concerning any of the specific examples they give of government legislation?