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CIA4MU Canadian Economics

CIA4MU Canadian Economics. Ch. 2: Productive Resources & Economic Systems Topic 2 – Economic Systems & Production Questions P 30 to 35. What. How. To Produce. For Whom. Introduction. By whom, with what? How can we do it efficiently? Large or small? Public or Private?

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CIA4MU Canadian Economics

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  1. CIA4MUCanadian Economics Ch. 2: Productive Resources & Economic Systems Topic 2 – Economic Systems & Production Questions P 30 to 35

  2. What How To Produce For Whom Introduction • By whom, with what? • How can we do it efficiently? • Large or small? • Public or Private? • Manual or Automated? • Which goods & services? • What is worth producing? • What are we giving up? • How will we share our output? • Who will get what? • How do we base our decisions?

  3. Introduction • How we answer these questions shapes the country in which live… • …and defines our Economic System which is the set of laws, institutions and common practices that determine how a nation uses its limited resources satisfy as many of its people’s wants and needs as possible • Generally, there are three ways that these questions get answered:

  4. By Tradition • Past practices and successes determine the answers to the 3 production questions • We continue to produce what we have in the past and in the same way and quantities • Skills and practices are passed down • Goal is self-sufficiency, surpluses are traded/bartered • Planning is local or within a family • Very static

  5. By Command • All production decisions are made by a small group of political leaders • Have the power to enforces these decisions across the entire economy • Planning is centralized and all productive resources are owned by the state • State commits to feeding and clothing labourers, labourers commit to working for the state • Mostly capital goods are produced, Consumers goods are in short supply

  6. By Market Forces • Economic activity is coordinated by many who make independent decisions in a free market place (aka free or private enterprise) • Consumer (purchasing power) dictates what will by made and how much • Produces move from unwanted goods to “in-demand” goods

  7. By Market Forces • Consumers determine how things are produces based on their price demands-producers have to respond with cheaper/better production methods • Who gets what is based on income-the more you have the more you get • Basic elements: private property, freedom of enterprise, profit maximization and competitions

  8. Canada-A Mixed Market • Few “pure” economic systems • No one system has achieved perfection • Leaders try integrate the best elements of each • Canada: • Primarily Market • Contains elements of traditional and command • So is called a “Mixed” Economy

  9. Canada-A Mixed Market • Has both private and state owned enterprise (CBC v CTV) • Has both private and publicly owned land as well as reserve (communal) lands for natives • Free enterprise and government regulation • Social safety net (welfare, guaranteed income, Medicare, employment insurance and old age security • Also have underground or hidden economy

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