Economic Systems Who runs things around here? 6th/7th Grade Social Studies Mrs. Samples

SS6/7E5a a. Compare how traditional, command, and market economies answer the economic questions of 1. What to produce 2. How to produce 3. For whom to produce

GPS: SS6/7E5 The Student will analyze different Economic Systems. E.Q. – How can I understand the 3 major Economic Systems?

What is an Economic System? The way in which a nation uses its resources to satisfy the people’s needs and wants.

Answers three basic questions: What will be produced - what kinds of goods and services to produce (Food or Car, airplanes, Equipment) How will it be produced - how these good are to be produced. Workers or Mechanized machinery For whom will it be produced - how the goods and services will be distributed among the people

Traditional Economic System Society (the world we live in) and culture determine how goods and services are made, sold, and bought. Families, clans, or tribes follow certain customs to satisfy their basic needs. Children often went into the same type of job as their parents

Traditional Economy (cont’d) Based on primitive methods and tools Subsistence farming, as well as herding cattle and hunting and gathering Make their own clothing and tools Trade surplus for goods made by others Found today in underdeveloped, agricultural parts of South America, Asia, and Africa.

TRADITIONAL ECONOMY (cont’d) What is produced and what each person does is determined by birth. A person might be expected to do what his father did. The share of wealth is determined by custom or one's position in society.

Command Economic System The government decides what goods will be produced, how they will be produced, and how they will be distributed. The individual has very little say as to how the basic economic questions are answered What is produced and what each person does might be determined by a small group of individuals.

Health, education, and transportation is available to all at little or no cost to the people. Everyone receives similar pay so they don’t work hard or go beyond what’s expected of them.

Example: Cars The government decides: What type of cars will be made How many will be produced Which colors they will be produced in The price they will be sold for

Market Economy An economic system based on individual choice What is produced and what each person does is based on supply and demand. Sellers decide for themselves what goods and services will be produced.

MARKET ECONOMIC SYSTEM Individuals decide for themselves the answers to the basic economic questions. The United States is classified as a market economy.

Jimmy Choo

Mixed Economy An economic system that has features of traditional, command, and market systems Countries with mixed economy try to use the best parts of each system Government and market makes decisions about what is made, how much things cost, and how much people are paid

Answer these questions with a partner How does the individual benefit from a market economy? Why is there little social mobility (moving up in society) within a traditional economy? How might an individual benefit from a command economic system? What are the basic questions that all economic systems must answer?

Create a chart in which you would compare and contrast the similarities and differences between a COMMAND and MARKET economy. As you complete your chart, keep in mind the three basic economic questions that ALL economic systems must answer............ WHAT TO MAKE ? HOW TO MAKE IT ? WHO GETS IT ? ACTIVITY