Standard 13: Cite the advantages and disadvantages of a market economy, a command economy, and a mixed economy. Discuss the relationships between consumers, business, and government in various economic systems, and analyze differences in the rights and responsibilities of these factors in countries where these distinctive systems exist.
Types of Economic Systems
Read pages 63-69 in textbook.
Nations must answer these three basic
economic questions about how best to use limited economic resources to
get the goods and services the country needs.
1. What goods and services should be produced?
2. How should the goods and services be produced?
3. For whom should the goods and services be produced and distributed?
Based on how countries answer these questions, economists have classified economic systems into three broad categories.
Traditional Economies
What to produce? little choice, what they need to survive using natural resources
How to produce? usually use simple, handmade tools and their ingenuity, learned from ancestors
Produce for whom? for themselves, any excess are traded among residents
Market Economies
Market economies are propelled by the rights of
individuals and companies to produce and sell through competition
without government involvement.
What to produce? consumers decide by purchases
How to produce? businesses decide by keeping costs low in hopes of producing high profits
For whom? people with money
Command Economies
A country's government decides what, how, and for whom goods and services will be produced.
Mixed Economies
Will be a mixture of 2 or more of these economies but may "lean" in a certain direction.
Student Activity
After reading pages 65-69, with a partner complete the graphic organizer that illustrates:
- Complete the Venn diagram to record similarities and differences among market and command economies.
- (On back of worksheet:)Advantages and disadvantages of each economy (5 points)
- Explain relationships between consumers, business, and government in various economic systems (5 points)
- Give at least 2 examples of countries that fall into each of these categories. (5 points)
