Chap 3 Econ Review

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Chapter 3

Economic Systems:

Who or what decides what you get?


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Chapter 3 Learning Objectives:Have you met them?

If you have come to class, completed the reading and participatedin all related class activities, you can

identify the factors and economic goals that influence decisions about theproduction and consumption of goods.

compare and contrast the role of government in command and marketeconomies.

compare the advantages and disadvantages for consumers and producersin command and market economies.

identify and explain the features of the American free enterprise system.


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Who gets what?

How do societies decide?


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Answer 3 Basic Economic Questions

Every society must answer them!

No matter how rich or poor

about the goods & services its peoplewant


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What will be produced?

Even with limitedresources, billions ofthings might be

produced.Who or what decideswhich wants to fulfill andwhich to leave

unsatisfied?

Click to edit Master text stylesSecond level

Third level Fourth level

Fifth level


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How will it be produced?

Many ways to make adesired item

Who decides how the

factors of productionswill be organized tomake what peoplewant?


Third level

Fourth level Fifth level


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For whom will it be produced?

Once produced

Who should get it?

First in line?

The highest bidder?

Person who needs it most?


Third level Fourth level

Fifth level


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Different societies have differenteconomic goals.

Freedom

Efficiency

Equity

Growth

Security

Stability

Societies differ in what is valued

Progress toward one goal may be at expense ofanother


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Who decides what.

in different economic systems?


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How do mixed economies

divide the decision making?


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Mixed Economies

Nearly all countries are mixed economies

Both the government and individuals play important role inproduction & consumption

Governments role varies, but includesProtection

(establishing institutions that allow markets to operate)

Regulation

(stepping in when markets run unacceptably)

Public Benefits

(providing goods & services that markets do not always provide,or do not provide enough of)


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Mapping Economic Freedom

Index of Economic Freedom, 2008


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What are the keycharacteristics of the U.S. freeenterprise system?

There are seven . .


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Economic Freedom

We are free to

Work where we want

Buy what we want

Sell what we want


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Competition

Firms are free to vie for our business

We, the customers, benefit


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Equal Opportunity

We all have (in theory) the same equal rights: To seek an education To compete in the marketplace


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Property Rights

We have the right to buy,sell and control the use ofour property, includingintellectual property.


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Binding Contracts

We have the right to enter intocontracts to buy and sell goods &services. Such contracts arebinding. Courts will enforce

them.


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Profit Motive

Drives the free enterprise system.Provides the incentive

To work To start new businesses


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Limited Government

Laws and governmentagencies regulate, but do notrun U.S. businesses.


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Documents

Chap 3 Econ Review