Warm Up Get textbook How does specialization make an economy more efficient? –Specialization leads to the efficient use of capital, land, and labor by allowing people to do that which they can do best and with the least waste of resources E. Napp

Modern Economies In this lesson, students will identify characteristics of modern economies. Students will be able to define and/or identify the following concepts and terms: Mixed Economy Laissez-faire Free Enterprise

E. Napp Just as this apple is not perfect, economic systems are not perfect. While a centrally planned economy has many problems, a free market economy is far from perfect.

E. Napp A Mixed Economy A mixed economy combines elements of different economic systems to meet the needs of the society. While modern economies are mixed, every mixed economy is slightly different from every other mixed economy. Some nations lean more towards central planning with some private ownership while other nations are predominantly free market with limited government intervention.

E. Napp The Chinese communists seized power in However, today, the Chinese embrace elements of the free market.

E. Napp The Chinese communists realized that workers needed incentives or reasons for increasing productivity.

E. Napp The United States is a mostly free market economy. However, the government does intervene in the market.

E. Napp It is important to remember that many abuses occurred in a totally free market. Child labor is one example of this abuse.

E. Napp Laissez-faire Laissez-faire was the belief that the government should not intervene in the market. It meant “let them do (as they please).” It allowed businesses to operate without any restrictions.

E. Napp Without government intervention, warning labels would not exist.

E. Napp Heroin could be purchased in your local supermarket.

E. Napp Government intervention protects our environment and our lives.

E. Napp Free Enterprise The United States’ economic system is called the Free Enterprise system. A Free Enterprise system is a mostly free market economy with limited government intervention. The government does intervene in the economy when it is in the public interest.

E. Napp So, modern nations have mixed economies. However, like milkshakes, mixed economies are not mixed the same.

E. Napp Questions for Reflection: Define a mixed economy. What problems are created by central planned economies? What problems are created by free market economies? Define Laissez-faire. What is the Free Enterprise system of the United States?