Economic systems
Shandor, Harleen, Tejveer, Giru
Five economic questions
How to produce?
In order to produce product companies must be competitive in making sure high quality goods are produced. Also considering production and employment methods.
Who will receive the produce?
Consumers who will receive the produce are people who are willing and able to spend a significant amount of money on it.
What Goods and Services Will Be Produced?
Firstly, there needs to be a demand for this product; in other words, consumers need to want this good or service. Geography often plays an important in what goods are produced.
How is product distributed?
Products are distributed usually by plane or boat to each country then distributed by train or truck to larger chains to be sold in stores.
Who produces the goods and services?
Goods and services are the outcome of human efforts to meet the wants and needs of people. Services are provided by other people, such as doctors.The people who provide these services must be educated and trained in the specific fields in order to provide the goods to consumers.
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.
The four economies
Market Economy
A market economy is an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
Traditional economy
A traditional economy is an original economic system in which traditions, customs, and beliefs shape the goods and the services the economy produces. Countries that use this type of economic system are often rural and farm-based.
Communist economy
The economic system of communism puts all planning of the economy in the hands of the government. A communist society distributes ownership of property evenly among every member. Because of the immense power of the state, small business is almost nonexistent in a communist society.(Cuba is an example of a communist economy)
Command economy
A command economy is the economic system in which decisions regarding production and investment are plans formulated by a central authority, usually a government. (Usually, dictatorial countries use a command economy.)
During the time Canada was in World War II, it was temporarily directed by the government under the War Measures Act. This caused Canada to adapt to an economy based on the production of arms and provisions for the military. For example the production of cars and other machinery were made to produce military equipment.
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