- Today’s Goal: Review Command and Market Economies
Learning Targets: I can…
- Define an economic system as a way people organize the production, distribution, and consumption of goods and services.
- State and explain the three basic economic questions every economic system must answer: What to produce? How to produce? For whom to produce?
- Describe the basic characteristics of market and command economies.
- Bell Work: In your journal record 3 basic economic questions. (What is being produced? How is it being produced? For Whom is it being produced?)
- Activity: What, How and For Whom to Produce?
- Homework: True/False Sheet
- Today’s Goal: Modern Economies in a Global Age
- I can explain the advantages and disadvantages of a market economy.
- Bell Work: Grab a book and open to page 54-55
Read pages 54 – 55
- In your notebook record at least 3 advantages and 3 disadvantages of a market economy
Impact of Market Economies
Economic and political freedom
- Individuals are free to make their own economic choices.
- Individuals are free to develop their interests and talents in word they find satisfying, rather than being assigned to jobs.
- The political process is freer since the government does not have a heavy hand to control the economy.
- Responsive to changes in conditions and can accommodate to them more quickly.
- Better economic decisions and productivity.
- This is a key factor of a market economy.
- Resources need to be allocated efficiently since inefficiencies would result in lower profits.
- A reward for hard work and innovation.
- Encourages competition leading to higher quality products and lower prices.
- In a pure market economy the economic good of the individual is the primary focus.
- A pure market economy has no mechanism for providing public goods and services because it would not be profitable to do so.
- No security to those who cannot be economically productive.
- Cannot prevent unequal distribution of wealth which could lead to unequal opportunities.
Why did so many societies feel it necessary to adopt some level of government involvement in market economies? - They felt they needed to provide public goods and economic security, and regulate economic activities.
- Activity: Advantages and Disadvantages of a pure market economy
- Extra time/Exit Ticket: What type of economy would you prefer to live in? Why?
- Today’s Goal: Modern Economies in a Global Age
- I can identify the main characteristics of a mixed economy.
- I can understand why most modern economies are mixed economies.
- I can explain why modern economies are becoming increasingly global
Bell Work: Journal – how is the government involved in your life?
- Discussion: How did they get to school – Public Roads / If they drove – State driver’s license. / If they bought anything they paid taxes.
- There is considerable economic freedom in the United States, but it is not a pure market economy, the government is involved in many ways.
Notes: Chapter 2 Section 4
Today’s Mixed Economy
Mixed Economy – An economic system that has elements of traditional, command, and market economies.
- It is the most common type of economic system.
- Even market-based modern economies have some elements of central planning and market economies have worked their way into command economies as well.
- Traditional production methods are still followed in some areas of both command and market economies.
- Traditional economies experience greater government involvement and growing pressure from market influences.
Types of Mixed Economies
- Although all modern economies are mixed, they often emphasize one type of system or another.
- Ex. Even though there are traditional and command elements, the driving forces of the U.S. economy are private ownership and markets. So, the U.S. has a primarily market economic system.
- Many European countries have a more even mix of market and command economies.
Trends in Modern Economies- Economics continues to change in response to changes in natural, social, and political conditions.
Discussion: In your opinion, are there some goods and/or services that should be publicly owned? Which ones?
Trend 1: Changes in Ownership
- Nationalize: To change from private ownership to government or public ownership.
- Privatize: To change from government or public ownership to private ownership.
Trend 2: Increasing Global Ties
- One way to help privatize and industry is to open up to foreign investors which creates an economic tie between nations.
- Businesses now engage in more foreign trade than ever before, and they depend not only on the products they buy from foreign nations, but also on the foreign markets in which they sell their products.
- Global Economy: All the economic interactions that cross international boundaries.
Why has there been a surge in economic globalization?:
- Opening the world’s markets to trade.
- Development of faster, safer, and cheaper transportation.
- Moving products can be relatively inexpensive.
- Telephone and computer linkages make global transactions quick, inexpensive and easy.
Cross-Border business partnerships.
- Ex. Car companies
Discussion: How do global business alliances benefit the U.S. Economy?
- Shared efforts lead to greater efficiency, which leads to lower production costs and greater profits for American businesses.
- Quiz Review
Homework: Globalization Article (and questions)
Thursday 9/29 – Quiz Day
- Today’s Goal: Assessment/Production Costs Worksheets
- Learning Target: Introduction to Chapter 3
- Bell Work: Hand in article questions then study for quiz
- When finished they will work on Production Cost Worksheet until everyone has finished their quiz
- Correct Quiz
- Make sure everyone understands the product cost worksheet – go over the first few together.
- Discuss yesterday’s article on globalization briefly
- Homework: Finish product cost worksheet
- Materials Needed: Notes, Random Objects for students to Reinvent
- Today’s Goal: Advantages of the Free Enterprise System
- I can explain why the United States is considered to have a capitalist, or free enterprise system.
- I can identify the legal rights that safeguard the free enterprise system.
- I can analyze how the profit motive and competition help to make the free enterprise system work.
- Bell Work: Get into a group of 3 – 4 people.
- Entrepreneurs group work
Chapter 3 Section 1 Notes:
Free Enterprise: an economic system based on private ownership of productive resources. (It is also known as a capitalist system)
Producers are free to produce the goods and services that consumers want.
- They are driven by their desire to earn a profit.
Business owners freely make a choice to start their business.
- They are free to choose how they will use their scarce productive resources.
- Consumers are influenced by their desire to buy the goods and services to satisfy their economic wants.
The government has a limited role, but can take action to limit free enterprise.
- These actions are designed to protect or encourage competition or to enforce contracts.
How can a government support free enterprise?
- Protect/Encourage Competition
- Enforce Contracts
- Keep Business Costs Low
- Producers are free to produce the goods and services that consumers want.
Why call it a FREE enterprise? - CHOICE
- Business owners have a CHOICE to start a business.
- Business owners have a CHOICE on how to use scarce resources.
- Business owners have a CHOICE of workers to exchange labor for pay.
- Consumers have a CHOICE on what to buy.
- REVIEW: Each economy has its own balance of tradition, free enterprise, and government involvement (mixed economy) and its own distinctive ways in which market forces work.
How the Free Enterprise System Works:
- The right to own property is one of the most fundamental freedoms in a capitalist economy and with that freedom comes the right to exchange the property voluntarily.
Open Opportunity: the ability of everyone to take part in the market by free choice.
- Ensure the market will reflect a wide range of interests and talents and will provide incentives to everyone to be efficient and productive.
Legal Equality: where everyone has the same economic rights under the law.
- Everyone has the right to succeed or fail in the marketplace.
Free Contract: where people decide which legal agreements to enter into.
- People must decide for themselves which legal agreements they want to enter into, such as a business, job, or purchase commitment.
Profit Motive: the force that encourages people and organizations to improve their material well-being from economic activities.
- Motivates people to start a business.
- Producers are motivated by profit to seek the highest possible price for their products.
Competition offsets the drive to earn profits since it forces prices down.
- This helps producers find a price that is not so high that it deters buyers and not so low that it inhibits profits.
1. What is the difference between open opportunity and legal equality?
Open opportunity allows people to participate in the market of their choice in the manner in which they choose. Legal equality assures that people in each market have the same economic rights.
2. What besides profit, if anything, might motivate a person to start a business?
Examples: None profits fulfill a social need, they want to be their own boss, etc.
3. What “fad” products have you seen come and go? What do these fads show about free enterprise?
Examples: Virtual Pets, beanie babies, bakugan, silly bandz etc.