1. Economic Systems Civics Mrs. Kozlik Chapter 18 Section 3 CE 11b

2. The 3 Basic Questions of Economics Each type of economy answers the three basic questions differently 1. What will be produced? 2. Who will produce it? 3. For whom will t be produced?

3. Traditional economy Economic decisions are based on custom & historical precedent (what’s happened before) People often perform the same type of work as their parents & grandparents, regardless of ability or potential (i.e. the family store or farm)

4. Characteristics of Command Economy Central ownership of property & resources (usually government controlled) Centrally-planned economy (usually planned by the government) Lack of consumer choice (ex. Only one type of potato chip or cookie)

5. Characteristics of a Free Market Economy Private ownership of property & resources Profit is the motive Competition is allowed Consumer Sovereignty – consumers decide what to buy and hence what is made Individual Choice – consumer has choice of several similar products Minimal government involvement

6. Characteristics of a Mixed Economy Individuals, businesses, and the government share economic decision-making Government is more involved than in a free market economy but less than command economy Most economies today (including the US) are mixed economies

7. Which of these systems exists in the United States? A Mixed Economy