Economic systems

Shandor, Harleen, Tejveer, Giru

An economic system describes how a country's economy is organized. Because of the problem of scarcity every country needs a system to determine how to use its productive resources. Everything is scarce, and an economic system tries to distribute scarce things (goods and services.) to accommodate all those unlimited wants

Five economic questions

The four economic resources:

Classical economics recognizes three categories of resources are land, labour and capital:

· Land – natural resources such as iron ore, gold, diamonds, oil, etc.

· Labor – human resources such as wage-earning workers

· Capital – plants and equipment used in the production of final goods, such as assembly lines, trucks, heavy duty machinery, factories, etc.

· Entrepreneurship – the person or group that provides resources in the production of final goods (Bill Gates, Steve Jobbs, Henry Ford, etc.)

Profit or environment?

As concerns grow about climate change and water, among other environmental issues, overgrowing businesses will continue to develop and add to the pollution. This happens when making their product or even while their company buildings are running or when the destroy land to build new company buildings. Either way, communities want this to stop and they want enterprises to limit the damaged they are causing. But changing their ways can cost them a lot and will cause them to lose employees.

Big image

The four economies

Disadvantages of a market economy

factors of production will be employed if only it's profitable to do so

· the free market can fail to provide certain goods and services

  • the free market may encourage the consumption of harmful goods
  • the social effects of production may be ignored
  • the market system allocates more goods and services to those consumers who have more money than others