1. Chapter Two: Economic Systems & Decision Making
Warm Up Question:
(write answer in notebook with today’s date)
What are the Three Basic Questions of Economics?

2. Unit I: Basic Principles of Economics
What do we call the place where buyers and sellers come together?
This concept is a vital aspect to our economic system. It allows the free exchange of g&s and the producers and consumers have the power.

3. Unit I: Basic Principles of Economics
ECONOMIC SYSTEM: an organized process to DECIDE how to use SCARCE RESOURCES to satisfy needs and wants.
3 Types of Economic Systems:
TRADITIONAL Economy:
COMMAND Economy:
MARKET Economy:
What do each of these words mean to you? Brainstorm with group

4. Move to a clean sheet in notebook: we need to make a table ECONOMIC SYSTEMS
heading
MARKET
COMMAND
TRADITIONAL
Make it for the whole page; we will add in the rows as we go along together and then in groups!!

5. Unit I: Basic Principles of Economics
MARKET Economy
Command Economy
TRAD- ITIONAL Economy
The past dictates, customs decide
WHO answers the 3 BASIC QUESTIONS?
Consumers & Producers decide
Gov’t Decides

6. Unit I: Basic Principles of Economics
MARKET Economy
Command Economy
TRAD- ITIONAL Economy
WHERE do these systems exist in the world?
USA, Canada, Japan, most of Europe
Inuit (Eskimo), Aboriginal (Australia), African & Amish Villages
Cuba, China, N.Korea

7. Unit I: Basic Principles of Economics
MARKET Economy
Command Economy
TRAD- ITIONAL Economy
PAGE 33
ADVANTAGES
Split Rest of Table for 2 last rows
DIS- ADVANTAGES

8. Traditional Economy Advant ages Dis- advant ages
Always KNOW ROLE in society
STABLE and predictable life
BASIC NEEDS provided
Dis- advant ages
LOWER STANDARD of living
WANTS are not met
NEW IDEAS discouraged
LACK of progress, NO CHANGE

9. Command Economy Advant ages Dis- advant ages
Always KNOW ROLE in society
Capable of DRAMATIC change
BASIC NEEDS provided
Dis- advant ages
Has LITTLE FLEXIBILITY to deal with small day- to-day changes
NEW IDEAS discouraged
Requires large GOVERNMENT
WANTS are not met
NO INCENTIVES to get people to work

10. Market Economy Advant ages Dis- advant ages
Decentralized decision making; bottom up
Able to ADJUST TO CHANGE gradually
Incredible VARIETY of g&s; many choices
Lots of FREEDOM & CHOICE (jobs, g&s)
LACK of GOVERNMENT interference
High degree of CONSUMER SATISFACTION
Dis- advant ages
People face UNCERTAINTY & FAILURE
Does not meet NEEDS of PEOPLE (homeless, hungry, uneducated)
Rewards only productive resources
Must guard against market failure

11. Group Activity ~ Relay
Can you decipher what the advantages and disadvantages of each of these systems would be?
Let’s see if you can work through it!!