Economic Systems and
Decision Making
Economics Chapter 2 Section 1 p.32-41
Read pages 32-34
Essential Questions: How does an economic system help a society deal
with the fundamental problem of scarcity?
Main Idea: Traditional societies use ritual, habit, or custom to answer
the basic questions of WHAT, HOW, and FOR WHOM to produce.
1. What does the term custom mean as it is used in the text?
2. What words and phrases provide clues to this meaning?
3. What are the main characteristics of a traditional economy?
Share your answers with you shoulder partner (2 min).
Read pages 35-36
Main Idea: Command Economies rely on a central authority to make most of
the economic decisions.
4. What are the advantages and disadvantages of a traditional economy?
5. Why do you think that leaders in traditional economies discourage or
even punish change?
6. How is the North Korean store in the photo different from a typical
convenience store in the United States? How are they alike?
7. How do people make career plans in the United States?
8. Why might command economies lack consumer goods?
Share your answers with you shoulder partner (2 min).
Read pages 37-38
Main Idea: In a market economy, consumers and businesses jointly answer
the questions of WHAT, HOW, and FOR WHOM to produce.
9. What are the major problems with a command economy?
10. How do the two entrepreneurs in the cartoon reflect this freedom of
choice?
11. What are some products that have fallen out of favor in the United
States?
12. Why aren’t these goods as widely produced as they used to be?
13. Which economic system do you think is best able to provide for the
wants and needs of individuals, and why?
Share your answers with you shoulder partner (2 min).
Read pages 39-40
Main Idea: Most economies in the world today feature some mix of
traditional, command, and market economies.
14. What are the main benefits of a market economy?
15. How might the government help with some of the disadvantages of a
market economy?
16. Why do the arrows (40) point away from socialism in both directions?
17. What distinguishes socialism from communism?
18. If you were to list China, North Korea, Cuba, and the United States under
the systems on the chart, where would you put them?
Share your answers with you shoulder partner (2 min).
Read page 41
Main Idea: Most economies in the world today feature some mix of
traditional, command, and market economies.
19. Why else might socialism be less efficient than capitalism?
20. How can you explain the range of mixed economies in the world?
21. How might the incentives in an economy play a role in the quality of
products produced?
Share your answers with you shoulder partner (2 min).