1. LESSON 1-3 Economic Systems
Goals
Identify the three economic questions.
Differentiate among the main types of economic systems.
Describe the economic system of the United States.
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2. Key Terms economic system command economy market economy
traditional economy
mixed economy
capitalism
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3. THE THREE ECONOMIC QUESTIONS
What to produce?
How to produce?
What needs and wants to satisfy?
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4. Types of Economic Systems
Command Economy
Market Economy
Traditional Economy
Mixed Economy
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5. Command Economy Resources controlled by the government
Government decides what and how goods are produced
How much of the resources will be used
How the resources will be used to produce capital goods
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6. Market Economy
Resources are owned and controlled by the people of the country
The three economic questions are answered
Marketplace is anywhere good and services exchange hands
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7. Traditional Economy
Goods and services are produced the same way they have been for generations
Usually used in less developed countries
They will consume most of what they produce, sell/trade/barter the rest
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8. Mixed Economy Combination of the command and market economies
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9. TYPES OF ECONOMIC SYSTEMS
Command economy
Market economy
Traditional economy
Mixed economies
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10. THE U.S. ECONOMIC SYSTEM Private property Freedom of choice Profit
Competition
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11. Private property A citizen can own, use or dispose of things of value
Own anything you want as long as it does not break the law
If you invent something of value you are protected from others taking your idea
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12. Freedom of choice
You make the decisions independently and you must accept the consequences of those decisions
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13. Profit
The money that is left over after all of the costs of operating the business has been paid
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14. Competition
Consumer have the choice of buying the same product designed and developed by multiple companies
Increases the quality of products
Decreases the price of products
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15. >> C H E C K P O I N T
Name the four principles of the U.S. economic system.
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16. LESSON 1-4 Supply and Demand
Goals
Describe supply and demand orally and with graphs.
Discuss how supply and demand affect prices of products and services.
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17. PARTICIPATING IN A MARKET ECONOMY
Consumers set demand
Producers establish supply
A graphic view
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18. DEMAND AND SUPPLY
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19. >> C H E C K P O I N T
How does the price of a product affect demand and supply?
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20. DETERMINING PRICE Factors influencing demand
Factors influencing supply
Determining market price
SUPPLY IS HIGH, DEMAND IS LOW PRICE IS LOW
SUPPLY IS LOW, DEMAND IS HIGH, PRICE IS HIGH
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21. MARKET PRICE
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22. >> C H E C K P O I N T
How is the market price for a product determined?
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