Standard • SSEF4a- Compare the different economic systems • SSEF5a. Explain why the gov’t provides for the people. • SSEF5b. Give Examples of gov’t regulation and deregulation and its effects.
Jan 21, 2016
Standard
•SSEF4a- Compare the different economic systems
•SSEF5a. Explain why the gov’t provides for the people.
•SSEF5b. Give Examples of gov’t regulation and deregulation and its effects.
Mixed Economy•A mixed economy has elements of both
market and command economies•Individual buyers and sellers often have
the right to decide how scarce resources are allocated
•The government plays a role when needed
Examples of Mixed/ Market Economies• North American countries • European Countries
Resolving Market Failures
A market failure is a situation where markets fail to allocate resources efficiently.
Market failure
•A market failure can happen when of these four conditions are not met1. Adequate Competition2. Well informed buyers and sellers3. Resources to move from one industry to another4. Reasonable Prices
Correcting market failures in a mixed-market economy•The government tries to keep the
market competitive and provide public goods and services so market failures don’t occur.
•They can also regulate industries to prevent market failures.
Characteristics of Mixed Market
The Government
Characteristics of Mixed EconomyGov’t Regulation & Deregulation•Regulation-tighter restrictions and
rules companies must follow
•Deregulation- relaxing rules and laws companies must follow
Maintaining Competition in a mixed-market economy •The government uses regulation and deregulation to make sure industries:
▫stay competitive▫products are safe for consumers▫working conditions are safe/fair
Examples of government intervention:Regulation Deregulation• FDA-food and drug safety• EPA- environmental safety• FDIC- protection within
the banking system• 18th Amendment
• Phone Companies• Banks• Airlines• 21st Amendment
The government provides Public Goods•Public goods are consumed without paying
for them so the government provides them through tax dollars if people want them.
• Individuals or private businesses wouldn’t provide
•Most goods and services are private
2 Characteristics of Public Goods:
Public Good
Redistribution of Income
• Tax those with large income and help those in need
• Examples: ▫ Welfare▫ Medicare▫ Unemployment▫ Social Security▫ Healthcare?
Stabilize the Economy
•Reduce unemployment and inflation, and promote economic growth
Allocating Resources
•Command: government makes all the decisions
•Market: consumers decide by their purchases
•Mixed: government provides minimal guidance and regulations for production of goods/services
Incentives
•Command: None
•Market: High. Driving force (profit) of efficiency and productivity.
•Mixed: High. Profit is the major incentive of efficiency and productivity.
Profit Motive
•Command: does not exist. Government makes all decisions.
•Market: system is driven by profit. Survival of the fittest.
•Mixed: Profit is the driving force. Tends to be socially conscious.
Consumer Sovereignty
•Command: consumers have little say. Government makes all decisions.
•Market: focus is on consumer goods and what consumers will buy, high consumer satisfaction
•Mixed: high degree of seller/buyer autonomy determines supply and demand
Competition
•Goal: price stability•Command: individual initiative is
unrewarded, no competition
•Market: very stiff competition, survival of the fittest
•Mixed: government gets involved when businesses/individuals get too powerful/rich
Government Regulation•Goal: competition and food/workplace
safety
•Command: all decisions made by government. Red tape slows things down.
•Market: Very little government interference, if any.
•Mixed: directs industry into needed areas, little interference