What is Economics?

Economics is not just money. It's

businesses and how they work. It's
lemonade stands and how many dollars
they take in. It's toy collecting and
baseball card collections. It's taxes and
allowances. It's stocks and bonds.
Economics is part of almost everything
you could ever think about.

Compare how traditional, command,

and market, economies answer the 3
economic questions of:

What to
produce?

For whom to
produce?
How to produce?

Copy this graphic organizer on your

paper

Economic Systems

Command

Market

Traditional

Command Economic System

A command economy, also called planned
economy, is directly controlled by the
government. The state owns all property and
controls all resources including land, labor,
and capital. Allocations of resources, supply,
wages and price are regulated by the
government. Although health, education, and
transportation are available to all for little to
no cost, there is little incentive for people to
work hard. As a result, production levels are
barely met and products that are produced
are usually of poor quality.

Compare how traditional, command,

and market, economies answer the 3
economic questions of:

What to
produce?

For whom to
produce?
How to produce?

Traditional Economic
System

A system in which social roles and culture

determine how goods are made, sold, and
bought. Families, clans, or tribes follow
certain customs that have been handed
down from one generation to the next to
satisfy their basic needs (children often grow
up to perform the same work as their
parents). In the past, societies had elders
who decided when and how to plant crops,
hunt, or move to another place. Leaders
would receive goods as tribute and they
would in turn give those goods to those who

Compare how traditional, command,

and market, economies answer the 3
economic questions of:

What to
produce?

For whom to
produce?
How to produce?

Market Economic Systems

Based on individual choices and
voluntary trade.
In a market economic system, or free
enterprise system, individuals and
businesses make economic decisions.
People can choose to enter into business,
or they may sell their labor to anyone
they want, and customers are free to
spend their money as they wish. In such
a system, the market determines prices
and wages (Laws of Supply and Demand).

Compare how traditional, command,

and market, economies answer the 3
economic questions of:

What to
produce?

For whom to
produce?
How to produce?

Command Economy

Market Economy

Government controls
production, wages
and prices

People can own and

Operate a business
With little to no
Government interference

People have no say

as to what the
Government does.

Laws of supply and

demand determine
production, wages,
and prices.

Both buyers and sellers

play a part in deciding
what will be available
for sale and how
much it will cost.

Traditional Economy

Society or culture
determine what is
produced and sold.

Children usually
follow in the
occupation of
their family
members.

Supply and Demand

Definition:Producerssupplygoodsandservicesandconsumersdemand
them.Pricesinthemarketaredeterminedbysupply and demand.

The law of SUPPLY

says that as the price of
something increases,
producers will produce or
offer more. The opposite
is also true ... if the price
of something decreases,
producers will produce or
offer less.

The law of DEMAND

says that as the cost of
something increases,
people will demand (or
buy) less. The opposite
is also true ... if the
cost of something
decreases, people will
demand (or buy) more.

Mixed Economic System

An economic system that allows for the
simultaneous operation of publicly and
privately owned. Economy in which both
market forces and government intervention
and direction are used to determine
resource allocation and prices. The U.S.
Economy is a mixed economy; while it relies
to a great extent upon markets, government
also regulates some of the private economy.
Since no country has a pure command or
pure market economic system, all
economies combine aspects of both.

Explain how most countries have a mixed

economy located on a continuum between
pure market and pure command.

Thereisnopuremarketeconomy,becausethe
governmentregulatessomethings,likesafety,workhours,
wages,etc

Compare and contrast the basic types

of economic systems found in:

Brazil

Canada
Cuba

Canada

Asanaffluent,high-techindustrialsocietyinthetrillion-dollarclass,
CanadaresemblestheUSinitsmarket-orientedeconomicsystem,
patternofproduction,andaffluent/highlivingstandards.SinceWorld
WarII,theimpressivegrowthofthemanufacturing,mining,andservice
sectorshastransformedthenationfromalargelyruraleconomyintoone
primarilyindustrialandurban.

Cuba

Thegovernmentcontinuestobalancetheneedforeconomiclooseningagainsta
desireforfirmpoliticalcontrol.Ithasrolledbacklimitedreformsundertakenin
the1990stoincreaseenterpriseefficiencyandalleviateseriousshortagesof
food,consumergoods,andservices.TheaverageCuban'sstandardofliving
remainsatalowerlevelthanbeforethe1990s,whichwascausedbythelossof
Sovietaid.Sincelate2000,Venezuelahasbeenprovidingoilonpreferential
terms.Cubahasbeenpayingfortheoil,inpart,withtheservicesofCuban
personnelinVenezuela,includingsome20,000medicalprofessionals.In2007,
highmetalspricescontinuedtoboostCubanearningsfromnickelandcobalt
production.Havanacontinuedtoinvestinthecountry'senergysectortomitigate
electricalblackoutsthathadplaguedthecountrysince2004.

Brazil

Characterizedbylargeandwell-developedagricultural,mining,manufacturing,
andservicesectors,Brazil'seconomyoutweighsthatofallotherSouth
Americancountriesandisexpandingitspresenceinworldmarkets.Having
weathered2001-03financialturmoil,capitalinflowsareregainingstrengthand
thecurrencyhasresumedappreciating.Theappreciationhasslowedexport
volumegrowth,butsince2004,Brazil'sgrowthhasyieldedincreasesin
employmentandrealwages.

Economic Systems

Pure
Command

Pure
Market

c
i
m
o
n
s
o
Ec stem
Sy
Cuba
28%

Pure
Command

Canada
81%
Brazil
57%

Pure
Market

 How many basic types of economic

systems are there?
Name the economic systems.
Which economic system do most
textbooks say is the most common
throughout the world?

 How many basic types of economic

systems are there? 3
Name the economic systems.
Traditional, Command, Market
Which economic system do most
textbooks say is the most common
throughout the world? Mixed. The
GCEE states that mixed is not an
economic system but rather a blending
of two different types of systems.

References

http://www.emergenttech.ca/emergenttech/images/canada_map.gif
http://www.fadiba.dk/images/brazil_map.gif
http://www.investorglossary.com/command-economy.htm
http://www.socialstudiesforkids.com/subjects/economics.htm
http://www.harpercollege.edu/mhealy/geogres/maps/worldgif/wwcomm
and.gif
http://www.kidseconbooks.com/html/lemonade_for_sale.html
http://www.realtrees4kids.org/ninetwelve/supply.htm
https://www.cia.gov/library/publications/the-worldfactbook/geos/ca.html
https://www.cia.gov/library/publications/the-worldfactbook/geos/br.html
https://www.cia.gov/library/publications/the-worldfactbook/geos/cu.html