ECONOMIC SYSTEMS INTRO TO BUSINESS COACH CURTIS – COLLIERVILLE HIGH Chapter 2

Three key economic questions to be answered; What goods and services are to be produced? How should the goods and services be produced? For whom should the goods and services be produced?

Who will benefit? Determining which of its citizens should benefit from the production of goods and services is something each nation must decide.

3 TYPES OF ECONOMIC SYSTEMS Custom-based: Goods are produced the same way *Amazon Tribes

Directed (Planned) Economy Owned and controlled by the government: Cuba China Communist countries

Market Economy The three questions are answered. Individuals free to engage in business transactions. Usually found in democratic government: USA Japan Capitalist Countries

Mixed Economy Most countries Combine Government and Private Ownership USA Post-office Schools Town of Collierville (Water/Trash Bill)

CAPITALISM Economic resources are usually privately owned by individuals rather than by the government. Individual owners free to decide what they will produce with the resources. Voluntary Exchange

MARKET Arrangement that allows buyers and sellers to come together to trade goods, services and resources

MARKETPLACE Any place where buyers and sellers exchange goods, services, and some form of money. Example: When government hires new employees they receive human resources in exchange for compensation.

PRIVATE PROPERTY The right to own, use and dispose of things of value

VOLUNTARY EXCHANGE The act of buyers and sellers freely and willingly engaging in market transactions.

Free or Private Enterprise You may start or invest in any business as long as it is legal to do so.

PROFIT The money left from sales after subtracting all the costs of operating the business. Run a risk of losing invested money Owners face extra hours Stress

Competition Rivalry among businesses to sell their goods and services to buyers The reason for advertisement Buy new and improved products Who else is using their product Dog eat dog world

Freedom of Choice Enter the business you want to enter Select the career you want most Earn a profit by competing in business

PROFIT MOTIVE Work Hard Be Creative Earn More Invest more New Products

FREEDOM OF CHOICE Right to enter business or career of your choice Own property Make profit Compete

Government Regulations Not pure capitalism Prevention of harming others Example: Can not dispose of chemical waste Cant practice surgery unless you have been granted a medical license by the appropriate agency

Previously controlled economies new rights The right to earn a fair profit The right to do business with minimal government regulation The rigth to fail

Complete Questions An establishment or enterprise that supplies goods and services in exchange for some form of payment is _______________ The key economic questions must be answered because resources are _________________ A place where __________ and __________ exchange goods and service for money is called the marketplace. The second question in the key economic questions is: _______ should the goods and services be produced. The third question in the key economic questions is ____ ___ should the good and services be produced.