Download TRADITIONAL ECONOMY

Entrepreneurs and Their Role
in an Economy
• Provide an example of an entrepreneur.
• What are problems faced by
entrepreneurs?
• How can an entrepreneur increase a
country’s GDP?
Entrepreneur Cause and Effect
A country’s
laws make it
easier for the
entrepreneur to
start a
business and
have laws to
protect their
investments
An
entrepreneur
believes their
idea for a new
product will
earn a profit
and want to
risk their $ and
resources to
start a
business
If the business
is successful,
the
entrepreneur
will create
new products
and hire new
workers
(creates new
jobs)
GDP goes
up.
International
trade
increases.
Taxes are
collected to
help the
government
earn money
Three Economic Questions
What to produce?
How to produce?
For whom to produce?
How does each of the economic
systems answer the three basic
economic questions?
TRADITIONAL ECONOMY
Basic
Economic
Questions
Answer:
What to
produce?
How to
produce?
For whom to
produce?
What people need
to survive
Hunting, farming
& gathering
Make their own
products
Whatever was
produced in the
past
Social roles
determine who
does what
Whoever usually
received products
will receive them
again
COMMAND ECONOMY
Basic
Economic
Questions
What to
produce?
Government
decides what will
be produced
Answer:
How to
produce?
Government does
the planning for
production,
factory locations
(gov’t owns the
means of
production)
Gov’t chooses
people’s jobs and
their salaries
For whom to
produce?
Gov’t controls the
distribution
system for
housing,
transportation,
and sets prices.
Class reward
system, waiting in
line / rations
MARKET ECONOMY
Basic
Economic
Questions
What to
produce?
Whatever
consumers will
buy
Answer:
Success of a
good or service
determines
whether it will be
produced
How to
produce?
Business owners
choose – own the
means of
production
goal is the most
efficient and
profitable
methods
For whom to
produce?
Consumer’s
income
determines who
receives which
goods and
services
Whoever can buy
it!
MIXED ECONOMY
(more market than command)
Basic
Economic
Questions
Answer:
What to
produce?
Business owners/
leaders decide
what to produce
based on sales,
but the
government
controls some of
decision making
How to
produce?
Business owners/
leaders decide
how to produce
items, but the
government sets
minimum safety
requirements,
minimum wage,
and age to work
for workers. Also
set guidelines for
products (safety)
For whom to
produce?
Consumer’s
income
determines who
receives which
goods & services
(whoever can buy
it), but the
government
provides welfare
benefits for the
needy
MIXED ECONOMY
(more command than market)
Basic
Economic
Questions
Answer:
What to
produce?
Government
decide what to
produce, but
private ownership
of business is
allowed in limited
amounts
How to
produce?
Government
controls most of
the means of
production, but
business owners/
leaders make
limited decision
on how to
produce items
For whom to
produce?
Government
determines who
receives which
goods & services;
a few items
available outside
government
control (black
market)