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ECONOMIC SYSTEMS AND THE INDUSTRIAL REVOLUTION
Opening Question
What is an economy? What comes to mind when you think of an “economy”?
Economic Changes
From feudal/land ownership to mercantile
A lot of resources = a lot of products Foreign trade
Economic Systems
Look to answer the questions… What to produce? Who will produce it? How it will be produced?
Include… Traditional (subsistence) Market Command
Traditional
Make food/supplies for themselves Little surplus Trade only if available Sometimes called subsistence farming
Poorer areas
Market
People freely choose what to buy and sell Natural resources are
abundant which means many products can be made
Many types of businesses England began to
transition to market economy during the
Industrial Revolution
Components of Market Economy (Adam Smith)
Free-enterprise: Competition of businesses to determine price McDonald’s dollar menu vs. BK’s value
menu Supply and Demand: factors that
determine price Demand goes up, price goes up…supply
goes up price goes down Capitalism: businesses privately owned
Command Economy
Government controls resources, production and prices Profit not necessarily important Look to provide for people
if bread costs $1 to make but no one can afford, they will charge $0.25
Components of Command Economy (Karl Marx)
Communism: economic and political system in which Communist party (government) controls production and resources Russian Revolution
Socialism: collective ownership of land and production (in theory)
Command Economies look to keepthe playing field relatively level