1. On the notecard provided…
Write how Steve Jobs was one of the great entrepreneurs of your lifetime.

2. Economic Systems
Chapter 2

3. Answering the Three Economic Questions.
Chapter 2 section 1
Answering the Three Economic Questions.

4. What goods and services should be produced?
How should goods and services be produced?
Who should get those goods or services?

5. Economic Systems
Economic System – The method used by a society to produce and distribute goods and services.
What are some different Economic systems?

6. Traditional
Market
Command
Mixed

7. Making an economy Lets pretend that…
A country’s economy has just collapsed.
You were hired to rebuild their economy.

8. Persuasive Presentation
You and your team of three will research an economic system.
You will create a power point visual to show during your presentation.
Answer the questions on the assignment sheet during the presentation.
Sell me on your plan!

9. Laptops Take your assigned laptop Print to printer 308
Color copies to SHS media center
One person at a time with the pass to retrieve color copies.
When finished SHUT DOWN the laptops and plug them into the correct slot.

10. Economic Systems
Traditional Economy – found in rural, lesser developed societies.
Based on customs and traditions
Little desire to change or to grow
Lack of technology
Lower standard of living

11. Inuit of Canada

12. Economic Systems
Market Economy – Free market where individuals make the economic decisions.
Law of Supply and Demand

13. Economic Systems
Command Economies – A central government makes the economic decisions.
A.K.A centrally planned economy
Communism
Usually imposed on people by a militant organization.

14. North Korea

15. Economic Systems Mixed Economies – A mixture of all other systems.
Most developed countries are moving towards this.

16. Poster Project You and a partner will research an economic system.
You will create a poster that visually shows required information.
You will teach your system to groups that have been assigned the other economic systems.

17. Vocabulary
Take a moment to write out the definitions of the bold terms within chapter 2.
20 points Level 3

18. Continue to work on your posters

19. Group Discussions or Group Presentations

20. DO NOW
Relax, the desks are in a different formation, it is not the end of the world.
Get your poster
You have 10 minutes to finish up your posters.
Check to see if ALL information is present and that your names are on it.

21. DO NOW
Send your Power Point or Google Slides to me at

22. Free Markets = Market Economy

23. Free Market (Market Economy)
Economic systems that are based on “Voluntary exchanges”.
Individuals answer the 3 economic questions.
NO GOVERNMENT INTERFERENCE
Illustrated in the Circular Flow Model

24. Resources
Money
Households
Businesses
Money
Goods or Services

25. Circular Flow Model

26. Free Markets Self Regulating
Self-Interest and Competition lead to economic decisions that benefit the people in the market place.

27. Free Markets
Laissez Faire – The invisible hand controlling the market.
People want it or don’t.
Businesses that do not adapt fail.
No government controls

28. Issues with Free Markets
No checks or balances to protect peoples rights in the market place.
No controls to ensure social benefits
No Government controls to prevent market failure.

29. Command Economy

30. Characteristics of Market Economy
Private Property
Freedom of Choice
Self- Interest
Profit motive
Markets and Prices
Competition
Limited Government
Characteristics of
Command Economy
Public Ownership
Centralized Decision Making
Economic Planning
Allocated by Government

31. Command Market Issues with this system Bureaucracy becomes too large
Government ignores demand
People have no incentives to work harder.

32. Mixed economies

33. Negatives of Mixed Leans towards government control
Socialism can develop
Regulations for regulations sake

34. Do now…
Look over your notes and worksheet in preparation for a quiz.

35. Textbook Reading Read pages 44 – 50 Complete the vocabulary sheet
Answer the questions on the backside of the vocabulary using information from the text.

36. American Free Enterprise

37. Free Enterprise People are given freedom to choose
Government protects the rights of the people to make those choices.
Basic Social Services are guaranteed by the government.
Taxes are imposed on the people to fund these services.

39. Basic Principles
Profit Motive
Open Opportunity
Economic Rights

40. Profit Motive
Profit is a major incentive for both consumers and firms.
Forces businesses take calculated risks.
Encourages individuals to be more productive.

41. Open Opportunity Anyone can compete in the market place.
Allows for economic mobility.
Creates competition within the market.
This drives down prices
Improves the quality of products

42. Economic Rights Government provides… legal equality Private property
Free contracts
Voluntary exchange

45. How are our economic rights protected in our Constitution?
Constitution Day
How are our economic rights protected in our Constitution?

46. Answer on the notecard
Give 2 characteristics of a Free enterprise system.
List two ways that our Government protects our rights.
Put in mesh when finished

47. Up ahead… Looking at an exam on THURSDAY of this week.
Chapter 2 material

48. Public Goods and Externalities

49. Simulation
Everyone should have 2 red cards and 2 black cards.

50. Simulation Each round you will turn 2 cards to the market.
For every red card you keep you get $4.
For every black card that the market gets EVERYONE will get $1
Ex: If 15 people turn in a black card everyone will get $15

51. What does this simulation show us about public goods?

52. Public Goods
A shared good or service for which it would be impractical to make consumers pay individually and to exclude those who did not pay.

53. National Defense

54. Fire Protection

55. Police

56. Lighthouse?

58. Market Failure
A situation where the free market does not distribute resources efficiently.
Because there aren’t enough incentives for companies to build roads there would be none.
This is when the Government steps in to introduce public goods.

59. Public Goods Two Key properties non-rivalry in consumption
if I consume more, others do not need to consume less
non-excludability
you cannot prevent people from consuming the good
free rider problem

62. How much of a public good should be produced?
Mimic the market:
produce up to the point where marginal benefit equals marginal cost
examples:
number of police on the street
size of national defense force

63. Cost-Benefit Analysis
when the choice is to produce or not produce

64. Externalities
Definition: When the costs of producing or the benefits of consuming spill over to other people.
Negative externalities
Positive externalities

65. A Negative Externality: Pollution

66. Positive Externalities
Education
Innovative ideas
Research

67. Creates Positive Externalities
Limits Negative Externalities

68. Expand a bridge to decrease traffic congestion
Educate youth and then you have a literate community

69. To prevent companies from making to much pollution they will impose a tax.
To make driving conditions safer we have speed limits.

70. Discuss with a partner
What does it mean that a public good has non excludability?
What is Governments role in dealing with positive and negative externalities?

71. What thoughts come to mind when you think of Erie’s lower East side?

72. Dealing with the poor

73. Redistribution Programs
Cash Transfers
Temporary Assistance
Social Security
Unemployment
Workers Compensation

74. Redistribution Programs
In-kind Benefits – meant to improve living standards of a group.
Free or reduced lunches
Food Stamps
Section 8 housing
Free higher education

75. What would happen if we removed the previously listed services?

76. TEST ON THURSDAY