Lesson 147: Economic Systems Compared
Lesson 147: Economic Systems Compared
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As you should know by now, all economic systems must try to solve the problem of scarcity by answering these three basic questions:
• What will be produced?
• How will it be produced?
• Who will get it?
The three categories of resources (or factors of production) - land, labour, and capital - can then be used as is seen fit.
Canada's mixed economy is a combination of government control (central planning or socialism) and private enterprise (market economy or capitalism).
1. Complete the chart that follows to show how the three main types of economic systems try to answer the three basic economic questions.
|Economy |Socialism |Mixed Economy |Capitalism |
|What goods and services will be | | | |
|produced? | | | |
|How will the goods and services | | | |
|be produced? | | | |
|For whom will the goods and | | | |
|services be produced? | | | |
2. Based on your chart and what you now know about economic systems, try to decide which economic system matches each statement that follows. Write S for socialism, M for mixed economy, or C for capitalism. More than one answer may apply in some cases.
|_____ |a. Land and capital are owned totally by the government. |
|_____ |b. Consumers decide to buy more pizzas because the price is cut in half |
|_____ |c. Government sets and plans the country's economic priorities. |
|_____ |d. The United States is a good example. |
|_____ |e. The consumers, businesses, and elected government take part in economic decision making. |
|_____ |f. Producers and companies react to the wishes of consumers. |
|_____ |g. Government decides that there is no need for neon underwear in stores even though the consumer demand is there. |
|_____ |h. Policies set by individuals and governments have a major impact on each other. |
|_____ |i. The Soviet Union has been moving away from this type of economic system. |
|_____ |j. Canada is an excellent example |
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Answers
1.
|Economy |Socialism |Mixed Economy |Capitalism |
|What goods and services will be |Public sector decides. The public|Both public and private sectors |Private sector and consumers |
|produced? |owns goods and services and |decide. |decide what goods and services |
| |government makes decisions. | |will be produced based on demand.|
|How will the goods and services |Public sector decides. |Public or private sector decides |Private individuals and |
|be produced? | |depending on who owns the means |corporations decide on methods of|
| | |of production. |production. |
|For whom will the goods and |The public sector or government |Consumers and public sector |Consumers who demand the goods |
|services be produced? |decides who will receive the |decide. |and services will receive them. |
| |goods and services. | | |
2. a. S
b. C
c. S
d. C
e. M
f. M/C
g. S
h. M
i. S
j. M
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