1. What are the four types of economic systems?
Daily Writing Prompt
What are the four types of economic systems?

2. The Free Market
Individuals and businesses own the factors of production
Self-interest – buyers and sellers consider their own personal gain
Businesses engage in competition for consumer dollars

3. Free Market (cont.)
Profit is the incentive to participate in economic activity
Profit = financial gain
Revenue = income, $ you take in
Cost = $ you spend
P=R-C

4. Adam Smith Adam Smith wrote The Wealth of Nations “The Invisible Hand”
No government intervention
Consumers get products they want
Prices reflect costs of producing products

5. Advantages Disadvantages Highly Efficient No economic security
Economic Freedom
Competition encourages innovation and growth
No economic security
Inequality
Monopolies

6. Command Economy “Centrally-Planned”
Government controls the factors of production and decides what gets produced
No consumer sovereignty

7. Communism Karl Marx & Friedrich Engels – The Communist Manifesto
Workers will overthrow their oppressors & establish an equal society
“Workers of the world, unite!”

8. Disadvantages:
No incentives to work hard
Inefficient – can’t adjust to consumer demands
Limited freedom
Advantages:
Focus on equality
More social services
Stable

9. Government
Free Not Free
Free
Economy
Not Free

10. Making Choices
Trade offs – all of the alternatives that we give up when we make a decision
Opportunity Cost – the most desirable alternative given up as the result of a decision

11. Making Choices
Guns vs. Butter: Refers to the trade off that countries make when choosing between producing domestic or military goods

12. Exit Ticket How are market and command economies different?
What are the advantages and disadvantages of market and command economies?

13. Do Now
Pg. 28 #3,5,6,7
Pg. 34 #3,5,6
Pg. 38 #3,4,5,6

14. Adam Smith & Obama
Would Adam Smith have agreed or disagreed with President Obama’s handling of the economy?