Different Economic Systems
Chapter 2:
The Economic Systems
Section 1:
Introduction to Economic Systems
(pgs.38-41)
Types of Economic Systems
•
There is no such thing as a
Utopia, every society must face
scarcity and answer the three
questions: What should be
produced?, How should it be
produced?, & For whom will it be
produced?
•
The answers to these questions
shape the economic system a
society has.
•
An
economic system
is the way a
society uses its scare resources to
satisfy people’s unlimited wants.
•
The economic systems that you
will learn about in this chapter
are traditional economy,
command economy, market
economy, and “mixed”
economies.
Traditional Economy
•
This is an economic
system in which families,
clans, or tribes make
economic decisions based
on customs and beliefs
that have been handed
down from generation to
generation.
•
Examples of this would be
tribal societies where
men hunt and women
trend crops.
Command Economy
•
In this type of economy the
government decides what
goods and services will be
produced, how they will be
produced, and how they
will be distributed.
•
The wants of consumers are
rarely considered and the
government owns the
means of production—all
the resources, and factories.
•
Examples of this was the
former U.S.S.R. and current
North Korea and Cuba.
Market Economy
•
This economic system is based on
individual choice not government
directives.
•
The consumers and producers drive
the economy.
•
Consumers are free to spend their
money as they wish, to enter into
business, or sell their labor to
whomever they want.
•
Producers decide what goods or
services they will offer. They make
choices about how to use their
limited resources to earn the most
money.
•
In a market economy, individuals act
in their own self-interest when they
make economic choices.
A Deeper Look Into
Traditional Economies
•
Since the earliest times,
all societies were
traditional economies.
•
They serve the main
purpose of survival very
well, h/w it tends to be
inefficient and does not
adapt to change.
Advantages of Traditional Economies
•
It answers the 3 economic
questions very well.
•
A traditional society
produces what best ensures
its survival.
•
The methods of production
are the same as they have
always been.
•
Systems of distribution are
also determined by custom
and tradition.
•
There is little disagreement
over economic goals and
roles.
Disadvantages of
Traditional Economies
•
B/c it is based on ritual and
custom there is much
resistance to change, t/f
they are less productive.
•
While traditionally defined
roles eliminate conflict, they
also prevent people from
doing the jobs they want to
do or are best suited to do.
•
This means that people
acquire less material wealth
and have a lower standard
of living.
Under Pressure to Change
•
Around the world,
traditional economies are
under pressure from the
forces of change.
•
Subsistence farmers grow
just enough for there own
families, but now they
grow more.
•
Example the Kavango
people in Namibia are
leaving there homeland
and changing.
Introduction to economic systems reveals how societies address scarcity by determining what to produce, how to produce, and for whom. Traditional, command, market, and mixed economies are explored, highlighting their distinct approaches. Traditional economies rely on customs, command economies are government-controlled, while market economies prioritize individual choice. Advantages and limitations of each system are discussed, emphasizing the critical role they play in shaping societal functions.
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Presentation Transcript
Chapter 2: The Economic Systems Section 1: Introduction to Economic Systems (pgs.38-41)
Types of Economic Systems There is no such thing as a Utopia, every society must face scarcity and answer the three questions: What should be produced?, How should it be produced?, & For whom will it be produced? The answers to these questions shape the economic system a society has. An economic system is the way a society uses its scare resources to satisfy people s unlimited wants. The economic systems that you will learn about in this chapter are traditional economy, command economy, market economy, and mixed economies. http://comps.canstockphoto.com/can-stock-photo_csp11730725.jpg
Traditional Economy This is an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation. Examples of this would be tribal societies where men hunt and women trend crops. http://www.buzzle.com/img/articleImages/506016-43515-14.jpg
Command Economy In this type of economy the government decides what goods and services will be produced, how they will be produced, and how they will be distributed. The wants of consumers are rarely considered and the government owns the means of production all the resources, and factories. Examples of this was the former U.S.S.R. and current North Korea and Cuba. http://www.harpercollege.edu/mhealy/geogres/maps/worldgif/wwcommand.gif
Market Economy http://gerardlameiro.com/wp-content/uploads/2010/01/gerard_lameiro_characteristics480.jpg This economic system is based on individual choice not government directives. The consumers and producers drive the economy. Consumers are free to spend their money as they wish, to enter into business, or sell their labor to whomever they want. Producers decide what goods or services they will offer. They make choices about how to use their limited resources to earn the most money. In a market economy, individuals act in their own self-interest when they make economic choices.
A Deeper Look Into Traditional Economies http://www.virtualclassroom.net/tvc/econ/economic_systems/img004.GIF Since the earliest times, all societies were traditional economies. They serve the main purpose of survival very well, h/w it tends to be inefficient and does not adapt to change.
Advantages of Traditional Economies It answers the 3 economic questions very well. A traditional society produces what best ensures its survival. The methods of production are the same as they have always been. Systems of distribution are also determined by custom and tradition. There is little disagreement over economic goals and roles. http://www.econedlink.org/lessons/images_lessons/795_inuithunt1.jpg
Disadvantages of Traditional Economies http://f.tqn.com/y/useconomy/1/W/7/5/-/-/80955696.jpg B/c it is based on ritual and custom there is much resistance to change, t/f they are less productive. While traditionally defined roles eliminate conflict, they also prevent people from doing the jobs they want to do or are best suited to do. This means that people acquire less material wealth and have a lower standard of living.
Under Pressure to Change http://www.namibiahuntingsafaris.com/wp-content/uploads/2012/03/namibia-hunting-map.jpg Around the world, traditional economies are under pressure from the forces of change. Subsistence farmers grow just enough for there own families, but now they grow more. Example the Kavango people in Namibia are leaving there homeland and changing.
