Name:
Date:
Chp. 3: Economic Systems
Period:
Notes
Chp. 3: Economic Systems
11
Objectives about Title
EPF.1 The student will demonstrate knowledge of basic economic concepts and structures by
e) comparing the characteristics of market, command, traditional, and mixed economies
f)
identifying Adam Smith and describing the characteristics of a market economy
Essential Understandings about Title
1.
2.
3.
4.
5.
A variety of methods can be used to allocate goods and services. People acting individually or collectively through
government choose which methods to use to allocate different kinds of goods and services.
People in all economies must answer three basic questions: What goods and services will be produced? How will
these goods and services be produced? Who will consume them?
National economies vary in the extent to which they rely on government directives (central planning) and signals
from private markets to allocate scarce goods, services, and productive resources.
Adam Smith, author of The Wealth of Nations, is often called the “father of economics.”
A market economy has certain basic characteristics including private ownership of resources, prices determined in
markets, competition among businesses, consumer sovereignty, profit motive, and limited government.
Essential Questions about Title
1.
2.
3.
4.
Notes
What are the three basic economics questions?
How does each type of economy answer the three basic economic questions?
What were some of Adam Smith’s economic theories?
What are the characteristics of a market economy, and why is each important?
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Preview: Examine the political cartoons pictured. Then answer the questions below.
Cartoon A
Cartoon B
1.
Where are the people in each cartoon?
2.
Who or what decides what consumers get in Cartoon A?
3.
What advantages and disadvantages do you see represented in Cartoon A?
a.
a.
4.
Cartoon B?
Cartoon B?
Which store would you prefer to shop in, and why?
Notes
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Who Gets What? How Do Societies Decide?
I.
What are the three basic economic questions?
1.
2.
3.
II. Economic Goals Societies Must Address
1.
– the ability to make our own economic decisions without
interference from the government
2.
– strives for full employment –
, because
3.
– fair and just distribution of a society’s wealth
4.
– characterized by scientific and technological innovation
5.
– providing less fortunate members of a society with necessities
such as
6.
– goods and services we count on are there when we want them
What to produce?
How to produce
For Whom to produce
Goals
Country Examples
Command
Traditional
Market
Notes
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
The United States is
; however, since it has some
elements of government involvement (e.g., taxation and regulation) it is sometimes called a
.
is the freest of the market economies in
the world.

are mixed
economies and exist on a continuum between market and command. Some lean toward market; others lean toward
command.
Directions: Label the following countries on the map. You may abbreviate. Then, pick a color to represent command economies,
market economies, and traditional economies. Fill in the key below the map and color in the countries you labeled with the color that
represents their economic system.
(Canada, United States, Hong Kong, Ireland, Australia, Ethiopia, Somalia, Afghanistan, China, Vietnam, North Korea, Cuba)
Command Economies
Traditional Economies
Market Economies
III. Adam Smith and the Free Market
1.
Notes
Adam Smith believed that people,
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2.
Smith argued for trade, saying it
3.
Smith believed that competition among businesses
4.
Smith believed there was a limited but important role for government to do things such
5.
Smith observed that specialization and division of labor in a pin factory allowed
IV. Characteristics of Market Economies
1.
, which provides incentives for the
owners of resources to weigh the value of present uses against the value of conserving the resources for future use
2.
, which tends to lower prices and raise quality
3.
prices determined in the marketplace through the interaction of
4.
consumer sovereignty, the concept that
5.
, an incentive for businesses to produce what consumers
demand and to produce those goods and services efficiently—keeping costs down—in hopes of earning greater profit
6.
—protecting consumers,
workers, the environment, and competition in the marketplace.
Notes
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Glossary Chp. 3
Directions: Fill in the definition for the term listed. Then, in the box on the right, you have to draw a picture OR
write the definition in your own words OR write a sentence using the word that demonstrates its meeting.
Economic Equity
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Traditional Economy
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Command Economy
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Market Economy
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Factor Payment
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Mixed Economy
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Free Enterprise System
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Notes
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Summary
DIRECTIONS: Choose only one of the following:
a) write a summary (25-75 words) of what you believe was the most important aspect of the notes/lecture
b) write what you believe to be the most interesting or memorable part of the notes/lecture (25-75 words)
c) draw something that symbolizes the notes/lecture to you (has to be different than your title page)
Notes
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