EMS

• What is an economic system?


  An economic system is a system where goods are produced.
• What does an economic system involve?

  It involves the exchange of goods and services and the allocation of resources in a society.
• What are the three types of economies?

  • Planned
  • Market
  • Mixed

  
• What basic questions are asked in all economic systems?

  What goods should be produced? How should these goods be produced? For whom should these goods be produced?

  
• Why are these questions about goods production asked?

  Because resources are scarce.

  
• What is scarcity in economics?

  Scarcity is limited resources for unlimited needs.
• Who makes decisions in a planned economy?

  The decisions are taken by a central authority.
• What does the government control in a planned economy?

  The government controls all the major sectors of the economy.
• What does the government decide in a planned economy?

  The government decides what and how much to produce and how much is to be charged.
• What is the belief of planned economies regarding social welfare?

  They believe that social welfare is achieved through government control.
• Which countries follow a planned economy?

  Cuba, China, former Soviet Union, and Zimbabwe.
• What portion of Zimbabwe's economic activity comes from government funding?

  Nearly 98 percent of Zimbabwe's economic activity is due to government funding.
• What are the advantages of planned economies?

  • Main goal is the welfare of all citizens
  • Emphasis on health, education, and quantity of production
  • Equal education for all citizens
  • Low levels of unemployment
  • Prices controlled by government
• What are the disadvantages of planned economies?

  • No real incentive for innovation
  • Poor quality of goods
  • Lack of consumer choice
  • Less efficient businesses
• In a market economy, who owns the resources?

  Resources are privately owned.
• What motivates producers in a market economy?

  All economic decisions are guided by the motive to maximize profits.
• What is the role of the government in a market economy?

  The government does not interfere in the functioning of private enterprises.
• In which countries does a market economy exist?

  USA, Japan, Australia, and other countries.
• What are the advantages of market economies?

  • Quick response to people's wants
  • Wide variety of goods and services
  • Encouragement of new production methods
  • Lower costs for consumers
  • Greater profits for producers
• What are the disadvantages of market economies?

  • Encouragement of harmful goods consumption
  • Lack of public utilities
  • Social costs may not be considered
  • Potential for unemployment due to machinery
• What is a mixed economy?

  A mixed economy consists of elements of both market and planned economies.
• Who owns resources in a mixed economy?

  Resources are owned both by the government and private individuals.
• What are the advantages of mixed economies?

  • Freedom for producers and consumers
  • Government can stop harmful goods production
  • Reduced social costs through cost-benefit analysis
  • Less income inequality compared to market economies
  • Monopolies exist under government supervision
• What are the disadvantages of mixed economies?

  • Too much government intervention
  • Unequal allocation of resources
  • Favoritism and bureaucracy may advantage certain enterprises
  • Less efficient use of resources
• How does ownership of property differ among the three economic systems?

  • Planned Economy: Most property owned by government
  • Market Economy: Property owned by private individuals
  • Mixed Economy: Property owned by both government and private individuals

  
• How is the production of goods and services determined in the three economic systems?

  • Planned Economy: Government determines production
  • Market Economy: Market forces determine production
  • Mixed Economy: Both government and private individuals produce goods

  
• How are factors of production owned in the three economic systems?

  • Planned Economy: All factors owned by government
  • Market Economy: Individuals buy and sell factors
  • Mixed Economy: Mainly owned by private individuals, regulated by government
• How is the choice of occupation determined in the three economic systems?

  • Planned Economy: Government plans and provides training
  • Market Economy: Individuals choose their own profession
  • Mixed Economy: Individuals choose their career, with government incentives
• How are prices of goods determined in the three economic systems?

  • Planned Economy: Prices are stable and determined by government
  • Market Economy: Prices determined by supply and demand
  • Mixed Economy: Prices determined by demand and supply, with some government control

  
• What are the economic problems that need to be addressed?

  • Ensure basic needs are met: housing, employment, education, training
  • Create infrastructure for economic activity
• What is the first scenario in Activity 1 about?

  A person named Heraldo Esterez living in Cuba working for a government-owned sugar producer.
• What is the second scenario in Activity 1 about?

  A person named Mr. Dlamini opening stores for fried chicken with government regulations.
• What is the fourth scenario in Activity 1 about?

  A person named Peter Van Wyk who owns a toy factory with safety inspections.
• What are the statements to match with the economic systems in Activity 2?

  • Government controls business practices: Planned
  • Privately owned production factors: Market
  • Prices influenced by supply and demand: Market
  • Combines elements of all systems: Mixed
  • Synonymous with capitalistic economy: Market
  • Synonymous with communist/socialist economy: Planned
  • Individual purchasing decisions determine products: Market
  • Minimal government involvement: Market
• What type of economy does South Africa follow?

  South Africa follows a mixed economy.
• Why does South Africa follow a mixed economy?

  Because it combines elements of both market and planned economies.
• What must consumers be in order for a good or service to be considered demand?

  Consumers must be willing and able to pay for a good or service.
• What does demand refer to in economics?

  Demand refers to a want and the consumer's ability to pay for it.
• What does the Law of Demand state?

  The Law of Demand states that the higher the price of a good or service, the lower the demand will be, provided all factors remain constant.
• What happens to quantity demanded as prices decrease?

  As prices decrease, the quantity demanded increases.