Specialization- Economic Systems

How do societies allocate their resources?

The price system is the primary mechanism through which resources are distributed among the uses most desired by consumers.

How does a command economy function?

The government largely determines what is produced and in what amounts. It directs producers to make and deliver goods and services in specified amounts.

In command economies, the people (in the form of the state) own the means of production. The state, which is seen to embody the will of the people, decides what will be produced according to a plan based upon what the state calculates to be people's need and desire for various goods and services. The state also plays an important role in determining how goods and services are distributed, that is, in deciding who gets how much of what.

How do individuals/ businesses specialize and trade?

How does a market economy function?

Individuals specialize by product-people doing what they do best in return for money.eg.doctors,lawyers

Businesses specialize by process-organizing production into many stages and assigning workers to each stage.This specialization usually takes place in factories .eg. the making of soft-drinks.

Consumers and businesses decide what they want to produce and purchase in the marketplace. They make these decisions by “voting with their dollars.” Producers decide what to produce given the demand they see in the marketplace in terms of their sales and the prices they get for their goods and services.

What is specialization & how does it facilitate trade?

How does a mixed-economic system function?

Specialization: the process of concentrating on and becoming expert in a particular subject or skill.

Countries produce a surplus of the product in which they specialize and trade it for a different surplus good of another country. The traders decide on whether they should export or import goods depending on comparative advantages.

Both market forces and government decisions determine which goods and services are produced and how they are distributed. In general, market forces prevail in mixed economies. The government does not direct the private sector to produce certain goods and services in certain quantities at certain times. However, the government's influence in the economy stems from the amount of money (raised in the form of taxes and borrowings from the private sector) that it spends and, through various forms of welfare, redistributes.

How does voluntary exchange facilitate trade?

Voluntary exchange is when transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred.

Voluntary exchanges are more conducive to economic efficiency than exchanges mandated by governments.

Specialization- Economic Systems

Morgan Jenkins

Erin Jimison

4B