Scarcity and Types of Markets

Read the following two statements:
***People want more things than they have money to buy.
***The goods and services a society can produce at any one time are limited.
What problem results from these two conditions? 

• Imbalance of Power 
• Scarcity
• Excessive Wealth
• Opportunity Cost

Which describes a society with a traditional economy? 

• Is is based on doing things the way they were done in the past.
• It is located in a large urban area.
• It is organized in a large urban area.
• It is heavily dependent on industry.

What is the central characteristic of a market economy.

• Government owns the means of production.
• All wage earners are paid identical amounts.
• The existence of labor unions is prohibited.
• Business owners are motivated by a desire for profit.

What do the command economies of Cuba and North Korea have in common? 

• They prohibit government ownership of property.
• Everyone enjoys maximum economic freedom.
• Government answers the fundamental economic questions. 
• Private ownership of property is strongly encouraged.

What effect does competition have on producers in a market economy?

• Producers share their resources equally.
• Producers look to the government to divide resources.
• Producers improve the quality of their goods to increase sales.
• Producers raise prices since they expect to sell fewer items.

In a traditional economy, how is information about the way goods are made passed from one generation to the next?

• By the family.
• Through the legal system.
• By the public schools.
• Through government orders.

What is the role of the government in a command economy?

• It has little to say in which goods are produced.
• It does not influence which services are offered.
• It guarantees that consumers will earn a high income.
• It makes the most important economic decisions. 

Three statements are shown:
1. The desire for profits drives people to risk their time and resources.
2. Producers determine the supply of a product.
3. Consumers determine the demand for a product.
Which type of economy do these features describe? 

• A traditional economy.
• A mixed economy.
• A market economy.
• A command economy.

Two pictures are shown.
What do these two images have in common?

• They show farmers working in highly industrial economies.
• The farmers are working in traditional economies.
• These are government employees working on farms.
• The farmers are using modern agricultural methods.

The Minister of Economics has created a plan for our national economy. It emphasizes the production of iron, steel, and hydroelectric power. In manufacturing, tanks and tractors will receive top priority. Consumer goods are regarded as less essential. Citizens are expected to sacrifice personal comfort for their country.
In what kind of economy does this Minister of Economics live in?

• This is an example of a COMMAND ECONOMY because the government is deciding what to produce, how to produce it, and who gets to have it.
• This is an example of a MARKET ECONOMY because the producers and consumers are deciding what to produce, how to produce it, and who gets to have it.
• This is an example of a TRADITIONAL ECONOMY because the family is deciding what to produce, how to produce it, and who gets to have it.
• This is an example of a MIXED ECONOMY because both the government and the people are deciding what to produce, how to produce it, and who gets to have it.