ITB: 2-6 Compare and Contrast Types of Economic Systems

What is economics?

• The study of how individuals and societies make decisions about resources

• The study of how to make money

• The study of how to save money

• The study of how to spend money

What are the three basic questions that all societies need to answer?

• Who, What, Where

• When, Why, How

• What, How, For Whom

• Which, How, Why

What is an economic system?

• A system that regulates business and enforces laws

• A system that determines how resources are allocated

• A system that determines how goods and services are produced and distributed

• A system that determines how consumers buy products

Why is an economic system needed?

• To create scarcity

• To create mutual dependence

• To make hard decisions about resource distribution

• To make hard decisions about production

What is scarcity?

• The reality that people's wants always exceed the available resources

• The reality that people's wants are always fulfilled

• The reality that resources are unlimited

• The reality that resources are evenly distributed

Why do we depend on one another?

• To create scarcity

• To create mutual dependence

• To avoid making hard decisions

• To avoid resource distribution

What is a traditional economic system?

• A system that relies on cultural customs and bartering

• A system that relies on government-owned companies

• A system that relies on supply and demand

• A system that relies on private ownership of production

What is a centrally planned economic system?

• A system where production is determined by supply and demand

• A system where production is determined by a dominant centralized authority

• A system where production is determined by private ownership

• A system where production is determined by government-owned companies

What is a market economic system?

• A system where production is determined by supply and demand

• A system where production is determined by a dominant centralized authority

• A system where production is determined by private ownership

• A system where production is determined by government-owned companies

What is a mixed economic system?

• A system that combines elements of capitalism and socialism

• A system that relies on cultural customs and bartering

• A system that relies on government-owned companies

• A system that relies on supply and demand