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Economic Systems SS6E5 A.

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Presentation on theme: "Economic Systems SS6E5 A."— Presentation transcript:

1 Economic Systems SS6E5 A

2 3 Types of Economic Systems
Traditional Command Market

3 Objectives Identify three questions that all economic systems must answer. Describe a traditional economy Describe a command economy Describe a market economy Explain how most economies have a mixed economy located on a continuum between a market and command economy

4 Vocabulary Break Economic System
the system of production and distribution and consumption

5 Three Economic Questions
What to produce? How to produce? For whom to produce?

6 Traditional A traditional economy is shaped largely by customs and religion. Economic questions are answered by what happened in the past. Traditional economies are mainly found in rural areas.

7 Traditional Economy What to produce?
Just what is needed to take care of yourself and your family

8 Traditional Economy How to produce?
How it was produced in the past

9 Traditional Economy For whom to produce?
You product items for yourself and one’s household

10 Positives of a traditional economy
Predictable Knowing what your job will be Knowing the way you will live

11 Problems with a traditional economy
Lack many resources Only produce enough to live on

12 Command In a command economy the government answers the three basic economic question Sometimes called communism

13 Command Economy What to produce?
the government determines what to produce

14 Command Economy How to produce?
Government says how to produce

15 Command Economy For whom to produce?
Citizens regardless of market demand

16 Positives of a command economy
Because the government makes the decisions, people don’t have to worry about employment, housing, education, and healthcare

17 Problems with a command economy
Consumers get low priority Little freedom of choice All resources are owned by the government

18 Market Economy In a market economy, buyers and sellers answer the three economic questions. All resources are privately owned

19 Market Economy What to produce?
Producers and consumers decides Whatever the market demands that will produce a profit

20 Market Economy How to produce?
By private producers

21 Market Economy For whom to produce?
Consumers who demand the product and are willing to pay

22 Positives of a market economy
People can start their own businesses People have choice

23 Problems with a market economy
The desire for money may lead to poor quality of goods and services Business owners have to risk losing money

24 Vocabulary Break Continuum
A line that goes into infinity or on and on in both directions

25 Continuum of Economies
Pure Market Pure Command No Individual freedom Most Individual freedom Most economies fall in between a pure market and a pure command economy on the continuum

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