Economic Systems PDF

Economic Systems Satisfying unlimited wants with limited resources Scarcity? Questions to address scarcity? Planned/Command, Mixed, and Market economy? Pros? Cons? Consumers and Producers In Mixed and Market economies, consumer choices are an important factor in deciding what is produced and...

Economic Systems Satisfying unlimited wants with limited resources Scarcity? Questions to address scarcity? Planned/Command, Mixed, and Market economy? Pros? Cons? Consumers and Producers In Mixed and Market economies, consumer choices are an important factor in deciding what is produced and sold. A consumer is a person who buys products and services (a shopper). A producer is a person or business that provides a product or service. Goods and Services Consumers can purchase goods and/or services. Goods refer to those things that are produced/manufactured. Examples are things like hairspray, cellphones, or food. Services are provided by individuals, but you may not always take a product home with you. Services include a hairdresser, dentist, or mechanic. Supply and Demand In mixed and market economies, consumer choices regulate supply and demand. Supply is how much of a product or service there is available to consumers for purchase. It also refers to how much a producer is willing to produce at a certain price. Demand is how much consumers want/need a particular product or service, how much they are willing to pay for it, and how much of the product can be sold at that price. Equilibrium is where supply and demand are equal. Supply and Demand Supply and Demand have a specific cause-and-effect relationship which regulates mixed and market economies without needing high involvement of a government. Supply and demand affect prices of products, how available they are, and the jobs connected to creating those products. Principles of Market Economy Market Economies are characterized by three things: 1. There is private ownership of resources 2. There is an emphasis on individualism 3. Prices are set by supply and demand Principles of Command/Planned Economy Command economies are characterized by three things: 1. There is public ownership of resources 2. There is an emphasis on cooperation. 3. Prices are set by the government. How does supply and demand impact market economies? Competition: This is the rivalry among producers to sell the products to consumers. There is no competition in a command economy. Monopoly: - Rare, it must have some government support. - It does not have to be competitive in price (if the government is supporting, the company can operate at a loss. Often prices are regulated by government. Why do governments intervene in Market Economies? Government intervention in Market Economy The government makes regulations to protect the common good. This includes imposing taxes on items to help them by recycled, or ensuring business liste ingredients on their products for consumer safety. The government collects taxes to fund programs and services that are essential to the common good. Examples: public education, postal services, welfare, unemployment insurance and health care. Governments can impose laws to ensure there is competition between businesses. For example, it is illegal for oil and gas companies to agree on a fixed price for gasoline. Competition in prices is desirable because it ensures consumers get the best products at the best prices.. To what extent does a market economy facilitate freedom and individual choice? To what extent does a command economy facilitate creativity and motivation? To what extent do market economies influence societal values? What are some examples of those values that are present in market economies? To what extent do command economies influence societal values? What are some examples of those values that are present in command economies? To what extent do market economies promote cultural diversity? To what extent do command economies promote cultural diversity?