Chapter 2 Economic Systems and Decision Making - Highpeak

Chapter 2

Economic Systems and Decision Making

Economic Systems Section 1

? Today we get to talk about economies.

Do your parents want you to follow in their footsteps?

? Enter the same profession? ? Take over the family business? ? Attend the same college?

Even the American economy has some tradition.

Economic Systems

Section 1 Types of Economies:

Traditional

Strengths

Weaknesses

Sets economic roles for all, life Discourage new ideas, lower standard of living is stable and predictable

Command

Capable of great change in short time

Does not meet needs/wants of consumers Lacks incentives New ideas discouraged

Market

Adjusts to change

Some people get left out

Laissez Faire

Like the old

Produces great variety of goods

High degree of

consumption

Traditional

? Traditional: the allocation of scarce resources and nearly all other economic activity stems from ritual, habit, or custom.

? EX: Inuit in northern Canada

Command

? Command: one in which a central authority makes most of the what, how and for whom decisions.

? EX: Former Soviet Union

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