Economic Systems

• Business
• Tertiary Education

Do you use your resources wisely?Why?

Chapter 2:Economic resources and Systems

Section2.2: Economic Systems

Objectives of the lesson

1. Describe the three basic questions of the economy

2. Analyze the relationship between price, supply and demand

3. Contrast the way market economy and command economy answer the basic questions of the economy

Facts

Economics is the study of how individuals and groups of

individuals strive to satisfy their needs and wants by making

choices.

Societies make economic decisions about how to meet the needs of people by answering three basic economic questions.

What should be produced? Deciding to use a resource for one

purpose means giving up the opportunity to use it for something
else. This is called an opportunity cost.

How should it be to produced?

The methods and labor used as well as the quality of items produced are important factors

Who should share in what is produced?

In most societies, people can have as many goods and services as they can afford to buy.

The study of how individuals and groups of
individuals strive to satisfy their needs and wants by making choices.

1. Resources
2. Economics
3. Needs
4. Wants

What are the basic questions of the economy?

In the question what should be produced you decide about?

What determines how many goods and services people can have?

0

Economic systems are the methods societies use to distribute

resources.

A market economy is an economic system in which economic

decisions are made in the marketplace.

In a market economy, resources are privately owned. Citizens

can own their own homes, land, and businesses. Business owners decide how their businesses will be run, what to produce and sell, and how much to charge.

Price is the amount of money given or asked for when goods and services are bought or sold. Supply is the amount of goods and services that producers will provide at various prices.

Demand is the amount or quantity of goods and
services that consumers are willing to buy at various prices.

What is the other name for market economy?

1. Command
2. Free enterprise system
3. Market
4. Mixed

What is the the equilibrium point in the above graph?

Command economy

A command economy is an economic system in which a

central authority makes the key economic decisions. The government dictates what will be produced, how it will be produced, and who will get the goods

Mixed Economy

A mixed economy is an economy that contains both private and public enterprises. A mixed economy combines elements of capitalism and socialism

What are different economic systems?

1. Command, Market, Mixed Economy
2. Command and Market economy
3. Market Economy
4. Market and Mixed economy

Find the difference in the way command and market economy answer the basic questions of the economy.

Which is the recent economic system followed by countries?

What are the key terms of the lesson?