1. ECONOMIC SYSTEMS
ECONOMIC SYSTEMS
• are mechanisms in society which are there to solve
fundamental economic problems:
– What and how much to produce
– How to produce it
– For whom to produce
• Traditional economy
• Market economy
• Command/Centrally planned economy
• Mixed economy
(SUBSISTENCE ECONOMY)
• Typical for Neolithic Civilisation
• Based on agriculture
• Barter trade
• Goal: to earn profit
• Based on supply, demand and competition
• Mostly focused on consumer goods
(Centrally Planned Economy)
• Goal: to fulfil the plan
• Controlled by government
• Usually focused on industrial goods
MIXED ECONOMY
• In most developed countries
• Combination of market and command economies
• Consumer goods controlled by market forces
• Some industries controlled by government
HUMAN NEEDS AND WANTS
• Needs – material items which people have to have
to survive (food, clothing, shelter)
• Wants – items people wish to have (special clothes,
entertainment, jewellery)
– are the driving force behind the demand for
goods and services
HUMAN NEEDS AND WANTS
are divided in different ways:
- Basic (food), luxury (car, jewellery) and cultural
(books, education, theatre)
- Individual and social
- Material and immmaterial
- Essential and non-essential
- Biological and cultural
- Present and future