SS6Eu5. The student will analyze different economics systems.
The THREE Economic Questions
- What to produce?
This question asks what people will make and sell. Many countries produce goods or services based on which resources are available and which will make the most money for the lowest cost. A country's type of economy usually has less influence on this question than it does on the other questions. - How to produce?
This question asks how people will make a good or service. Manufacturing is a way to produce. Sometimes production is outsourced, or sent to other countries, in order to keep cost down. Downsizing reduces the number of employees, also allowing cost to be kept down. - For whom to produce?
This question asks whom goods are services will be made for. People in market economies will produce for a target market. This will allow them to make the greatest profit
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- Free market Private ownership of property/resources
Business decisions are driven by the desire to earn a profit
There is a great deal of competition
Consumers have many choices
- Command economy
Central ownership of property/resources
Centrally planned economy
Lack of consumer choice
Example: Former Soviet Union, North Korea, Cuba are close. (no pure command economies exist)
Traditional Economy
Allocation of resources is based on rituals, habits, or customs Roles are defined by family People work together for the common good Little individual choice |
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The type of economies in the real world...
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Economies in the Region
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