Assessing Economic Systems Strengths and Weaknesses
The content delves into the spectrum of economic systems, comparing command and market economies, highlighting failures in both systems, and discussing the United States' and China's positions in the economic system spectrum. It emphasizes the importance of understanding the mechanisms and implications of economic systems. Exploring the nuances, challenges, and impacts of command and market economies provides valuable insights into decision-making processes and resource allocation.
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Presentation Transcript
Economic Systems Conclusion Obj: Understand strengths and weaknesses of economic systems ES: C-4 Explicitly assess information and draw conclusions Agenda: 1. Economic System Spectrum 2. Marginal Analysis Demonstration
Command vs. Market Remember, an economy is simply the mechanisms by which a central body enforces decisions about the allocation of their factor of production (WHO? WHAT? HOW?) Command-publically owned industry and a central authority is making decisions about production and consumption Market production/consumption are a result of decentralized decisions from firms and individuals ***Who is answering the 3 key questions
Failures: Command Public taste s are difficult to predetermine Soviet Union routinely made incorrect predictions about what the people would want/need, thus, Their allocation of crucial raw materials was wasteful shortages and inflations ran rampant Lack incentives!!! (rewards or punishments for certain choices) Imagine if you were a manager of a restaurant No property rights---these drive people to produce things of value and put resources to their best possible use
Failures: Market Based on infinite growth, production, consumption All private individuals NEED to uphold morality and make responsible decisions (pollution and waste) Requires NO oversight from any government agency Markets can fail! When they do, how do they recover without complete devastation first?
The Economic System Spectrum 0 10 Command Market These markets are imperfect, completely theoretical, and could never exist in the real world The strongest economic systems simply have the best mechanisms in place to achieve the goals society deems most essential
The Economic System Spectrum 0 10 Command Market United States???
The Economic System Spectrum 0 10 Command Market China???
The Economic System Spectrum 0 10 Command Market France???
The Economic System Spectrum 0 10 Command Market North Korea???
In Summation People within these central bodies are the decisions makers!!! No correct system based on meeting societies needs in ways that they value PEOPLE S RESPONSES TO DECISIONS ROOTED IN SCARCE FACTORS OF PRODUCTION.
