Types of Economic Systems – CAPTIONED

Types of Economic Systems – CAPTIONED


We are gonna be talking about types of economic systems. And really the reason that I want to do this is so that when you guys do come into class on Friday you’ve got some background information and you can very quickly get some ideas about how to make your videos. So when we look at the four different types of economic systems there are four basic economic questions that each one answers. And the reason that they are different is because they each answer the questions differently. They look at what to produce, how to produce it and for whom to produce it. Those are the three basic economic questions and you need to be absolutely certain that you know what those questions are. Now the first type of economic system is a traditional system. This is an economy based on custom. There are not very many of these left. In the past this has been probably the most popular, the most prominent one but there are not many of these left. These tend to be in Eskimo culture or the Australian aborigines or in some of these real isolated places that live on subsistence agriculture where they just grow enough for themselves. In a traditional economic system when they look at what to produce it is the needs for survival. That’s all they produce. They don’t make extra. There’s typically no kind of money or anything like that. How to produce it is basically through hunting and gathering. And then for whom to produce it, they make everything for themselves. So there’s very little if any at all outside trade. They just make enough for themselves and for their family and, like I said, this is very difficult to find in the modern world. The second one is a command economy. In a command economy the government is the entity that answers the questions of production. In deciding what to produce, the government makes that decision. In deciding how to produce it, the government plans out what factories they’re gonna have, what jobs people are gonna have. The government is in control of everything. When they’re looking at for whom they’re gonna produce it, the government actually controls the distribution of all products. The government decides how to use their resources. This has been the type of economic system that is more common in socialist governments. Probably the best example if you look here on the right, this is the flag from the former Soviet Union. This is the form of economic system that was in the former Soviet government. Basically the Soviet government said we’re gonna make bread on Wednesday, people are gonna buy bread on Wednesday and that’s all that’s gonna be available. There’s very little choice by consumers. The third kind is a market economy. This one is also a pure market economy is also pretty rare because in a pure market economy literally the people or the consumers are the only ones who answer the questions of production. So when you’re looking at what to produce it is completely and totally up to consumers. When you look at how to produce it, businesses are the ones who choose what they’re gonna produce and then if consumers don’t buy it the businesses go out of business. For whom to produce these goods, it’s based on consumers’ income. If they can afford it, they can buy it. With a pure market economy, individuals are the ones that are in control. There is no government regulation whatsoever, which means that absolutely nothing would be illegal. If there is a market for it then people can buy it. There’s no government regulation over anything that is produced. There’s no government regulation over business so there are no protections for consumers whatsoever in a pure market economy. The fourth kind is a mixed economy. This is what most countries around the world are. In a mixed economy, consumers and businesses in conjunction with each other make those decisions about the economic questions but there is some government control. Businesses and consumers decide what to produce but the government sets up regulations to protect consumers from bad products, from products that are unsafe, from businesses taking advantage of them, that kind of thing. When you look at how to produce it, the government sets safety standards. They don’t allow in the United States things like child labor. There have to be certain work standards in factories and things like that or the government will step in and fine the companies or shut them down. When you look at who the goods are produced for, here it’s based on consumers’ income but there’s also some government assistance for people who can’t afford certain services. There is with a mixed economy, like I said, there is some government regulation but it’s mostly for the protection of consumers. Now when you guys come into class on Friday I’m gonna split you up into groups and you’re gonna have to come up with an idea for a video that’s based on or that teaches one of these types of economic systems and then we’re gonna share them. So be creative. Think about some props that you could use. Think about a little short storyline or something like that that you could put in your video. I’ll see you then.

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