epf1e comparing economies

EPF1E. COMPARING ECONOMIES

Basic Economic Structures

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How are economies different?

Essential question:

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Economies are Different A variety of methods can be used to

allocated goods and services. People acting individually or collectively

through govt choose which methods to use to allocate different kinds of services.

National economies vary in the extent to which they rely on govt directives (central planning) and signals from the private markets to allocate goods, services and resources.

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What are the 3 basic economic questions? What goods and services will be

produced? How will these goods and services be

produced? Who will consume these goods and

services?

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How does each type of economy answer the 3 basic economic questions??

Essential question:

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What are the 4 types of economies?

Market Command Traditional Mixed

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Command Economy

In a command economy the government or other central authority answers all of the questions

Ex. North Korea

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Traditional Economy

In a traditional economy, the answer to all questions is “What has always been done.”

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Market Economy

Consumers decide what will be produced by casting their “dollar votes”

Producers choose the most profitable method of production

Goods and services are consumer by those who are willing and able to pay the market price

Scare goods and services are allocated through the influence of prices on production and consumption choices.

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Mixed Economy

A combination The US is primarily a market economy;

however, since it has some elements of govt involvement (e.g., taxation and regulation) it is sometimes called a mixed economy

Most of the worlds economies today are mixes economies and exits on a continuum between market and command. Some lean towards market; others lean toward command.