Africa Econ Peer Remediation E1 and E2

​African Econ Peer Remediation E 1-E2

E1: a. Compare how traditional, command, and market economies answer the economic questions of 1-what to produce, 2-how to produce, and 3-for whom to produce.

In a command economy, the three questions are answered by the authorities in control of the government. The government sets the goals. Everyone works for the government. The government consumes the bulk of the goods and services produced. Because the government decides what the society will produce, the government controls the factors of production, and is the primary consumer of the goods and services produced in the society.

E1: a. Compare how traditional, command, and market economies answer the economic questions of 1-what to produce, 2-how to produce, and 3-for whom to produce.

In a market economy, the goal becomes the ability of producers to use their limited resources to produce a good or service that people want. The producer must be able to produce the good or services at a price low enough that they can then sell it to consumers at a higher price that consumers are able and willing to pay.

Basically, people and profit determine what is made in a market

Multiple Choice

In a market economy, only the government decides what goods are produced.

• True

• False

Multiple Choice

In a market economy, decisions regarding production and consumption result from the interaction of consumers and producers.

• True

• False

Explain that countries have a mixed economic system located on a continuum between pure market and pure command.

Here is the continuum

All countries have a mixed economy. But, the more government control there is, the closer it is to command. And the less government control, the closer they are to market.

Multiple Choice

Most societies have some type of mixed economy.

• True

• False

c. Compare and contrast the economic systems in South Africa, Nigeria and Kenya.

Here, we will look at each country one at a time

South Africa

The economy of South Africa is considered “moderately free” on the Heritage Foundation scale of economic freedom making it a “mixed” economic system. The rule of law is a strength in supporting economic freedom in South Africa in spite of government corruption. With regard to government regulations, the government has ended most price controls allowing for free markets to flourish, but there are still state-owned businesses which need to be reformed. Trade is significant for South Africa’s economy, with the combined value of exports and imports consisting of about 60 percent of the nation’s GDP.

Nigeria

The economy of Nigeria is considered “mostly unfree” on the Heritage Foundation scale of economic freedom making it a “mixed, leans command” economic system. The rule of law is hindered by rampant corruption, an underfunded court system, and political interference. Taxes are low in Nigeria, as is government spending, which means that people keep most of what they earn. However, wages are low and government services are insufficient.

Kenya

The economy of Kenya is considered “mostly unfree” on the Heritage Foundation scale of economic freedom making it a “mixed, leans command” economic system. The rule of law allows the government to confiscate land that it determines has not been used productively; the courts are weak, and corruption is ongoing. Government regulations and subsidies keep prices artificially low, illegal child labor is a problem, and government (not businesses) is the largest employer.

Multiple Choice

Bases on the information, which country has the most economic freedom for its citizens?

• South Africa

• Nigeria

• Kenya

Multiple Select

Using the previous slides, which countries would be closer to point a?

• South Africa

• Kenya

• Nigeria

Multiple Choice

Using the previous slides, which country would be closer to point c?

• South Africa

• Kenya

• Nigeria