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Scarcity and How Society Allocates resources

Scarcity and How Society Allocates resources. Broad Social Goals. Economic Freedom The right to choose Economic Efficiency Gains must be more than costs Economic Equity Fairness Economic Security Protections. Broad Social Goal Continued…. Full Employment Externalities Price Stability

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Scarcity and How Society Allocates resources

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  1. Scarcity and How Society Allocates resources

  2. Broad Social Goals • Economic Freedom • The right to choose • Economic Efficiency • Gains must be more than costs • Economic Equity • Fairness • Economic Security • Protections

  3. Broad Social Goal Continued… • Full Employment • Externalities • Price Stability • Inflation • Economic Growth • Improvement in standard of livingover time

  4. Capitalistic Ideology • Private Property • Freedom of Enterprise • Role of Self Interest • Competition • Markets and Prices • Limited Government Interaction • Use of Capital goods • Division of Labor • Money • Specialization

  5. Traditional Economy • Ritual, habit, custom • Not a lot of choice • 3 economic questions are answered • Stable

  6. Traditional Weaknesses • No innovation • Lack of progress • Few choices

  7. Command Economy • Centralized authority • Quick changes can be made

  8. Command Weaknesses • Does not meet wants and needs • Little incentive to work • Huge bureaucracy to make decisions • Little flexibility • Trouble getting ahead

  9. Market Economy • Supply and demand • The money makes the decisions • Room for adjustments • Producers make decisions • Efficiency • Little government • Individuals have influence • Large variety • Everyone’s needs can be met

  10. Market Weaknesses • FOR WHOM ? Is weak • Competition is not always at its best • Market failures • Only rewards producers

  11. Capitalism • Advantages • More efficient • High quality @ low price • Individual freedom • Flexible • Disadvantages • Pure capitalism does not meet all needs

  12. Socialism • Advantages • Takes care of non-producers • People elect officials • Disadvantages • Less efficient • Special interest influence

  13. Communism • Advantages • Workers cannot be fired • Public goods • Disadvantages • Lost individual freedom • Lack of incentives • Inefficient central planning

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