1. Economic Resources and Systems
Chapter 2 day 2

2. Types of Economic Systems
Market economy
Command economy
Mixed economy

3. Market Economy
In a market economy, economic decisions are made in the marketplace according to the laws of supply and demand

4. Demand
The amount or quantity of goods and services that consumers are willing to buy at various prices
How many new release video games would you buy if each one costs….
$90?
$45?
$15?

5. Supply
The amount of goods and services that producers will provide at various prices
If you were a business owner, how many new release video games would you produce if you could sell them for…
$90?
$45?
$15?

6. Equilibrium Price
When the quantity demanded and the quantity supplied meet

8. Capitalism Private enterprise system Resources are privately owned
You can own your own home
Your own land
Your own business
Government control is minimal
Primary role of government is to support the marketplace by removing obstacles such as trade barriers

9. Incentives Competition Profit motive
Businesses compete for customers by producing better and cheaper products
Constant demand for new goods and services encourages entrepreneurship
Profit motive
The desire to make more money
Incentive to work harder and longer if you can make more money

10. Problem Owners and producers reap the most rewards.
Unskilled workers and older adults are often unable to afford basic needs such as health care

11. The top 10 most Capitalistic countries are:
Hong Kong
Singapore
New Zealand
Australia
Switzerland
Canada
Chile
Estonia
Ireland
Mauritius

12. Command Economy Planned or managed economy
A central authority, usually the government, makes the key economic decisions
Communism
State controls all the resources for the common good
Socialism
State owns major resources and makes key economic decisions
However, individuals may own some businesses

13. Advantages Guarantees everyone an equal standard of living
The state provides you with a job, a place to live, and health care
Goods and services are distributed evenly

14. Disadvantages Little choice of what to buy
Goods that aren’t considered necessities are not available
Prices are fixed so there is no incentive to produce a better product
Wages are fixed
Doctors earn the same as an unskilled worker

16. Mixed Economy A combination of a market and command economy
The state takes care of people’s needs while the market takes care of their wants
The United States is said to have a mixed economy because privately owned businesses and government both play important roles.

17. Chapter 2 Classroom/Homework
Fast Review Page 22
Questions 1-3
Fast Review Page 23
Fast Review Page 27
Using Business Key Words Page 30
Questions 1-13