Traditional, Command, Market

• Economics- the study of how people, businesses & countries use their limited resources (ie: money & materials)

• There are 3 main types of economic systems & they all try to answer 3 BASIC economic questions: – 1. What to produce, 2. How to produce, 3. For

whom to produce**How they answer these 3 questions will

determine how successful the country is.

We all need 4 basic things to survive: ◦ 1. Food◦ 2. Clothing◦ 3. Shelter◦ 4. Water◦ Everything beyond these 4 needs is called a

WANT (ipod, designer clothes, car)

• Opportunity Cost is the thing that is given up when given a choice.

• For example---You go to the store you can buy an ipod or bread. You buy the bread. The opportunity cost is the IPOD…..the thing you gave up and did not buy (the opportunity lost).

• This is an example of a need VS. a want.The bread is a need (food)—the IPOD is a

want.

• Tradition means you do the same thing over and over again…

• People produce only what they need to survive and nothing extra

• People inherit their jobs from their parents – Example: if your mom is a doctor you will be a

doctor (there is little flexibility)– This is the least developed (poorest) economic

type– There is never any change to modernize anything

• Government owns what is being produced• Business & property belongs to the gov’t

instead of private ownership• The government decides what will be produced• The goal is to have economic equality (so there

is no rich or no poor, everyone is the same)• A shortage of good usally exists because the

gov’t makes all choices• Better jobs & producs do not receive more

money= Unfair.

• Private ownership of business & property• Little gov’t regulation (the gov’t doesn’t

determine what to make—instead the markets do.

• Freedom to make own choices• Based on supply & demand • Constantly changes to make better

products• More $ is offered for better products and

workers

***Most Economic System are MIXED (a little of all 3 economic systems mixed

together).***