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Unit 1.2 Economic Systems Learning objectives 1. Explain the classification of economic systems, and the strengths and weaknesses of different systems. 2. Explain the role of government in different economic systems. Now we turn to an examination of the type of economic system in which choices are made. An economic system is the set of rules that define how an economy's resources are to be owned and how decisions about their use are to be made. We will see that economic systems differ in terms of how they answer the fundamental economic questions. Many of the world's economic systems, including the systems that prevail in North America, Europe, and much of Asia and Central and South America , rely on individuals operating in a market economy to make those choices. Other economic systems, including those of Cuba and North Korea today and historically those of the former Soviet Union, Soviet bloc countries, and China.rely-or relied - on government to make these choices Different economic systems result in different sets of choices and thus different outcomes; the fact that market economies generally outperform the others when it comes to providing more of the things that people want helps to explain the dramatic shift from government -dominated toward market-dominated economic systems that has occurred throughout the world in the past decades. Under what circumstances will a nation achieve efficiency in the use of its factors of production? Why would decision makers throughout the economy want to achieve such efficiency? Economists assume that privately owned firms seek to maximize their profits. The drive to maximize profits will lead firms to allocate resources efficiently to gain as much production as possible from their factors of production. But whether firms will seek to maximize profits depends on the nature of the economic system within which they operate. Each of the world's economies can be viewed as operating somewhere on a spectrum between market capitalism and command socialism. In a capitalist economy, resources are generally owned by private individuals who have the power to make decisions about their use A market capitalist system is often referred to as a free enterprise economic system. In a command economy, the government is the primary owner of capital and natural resources and has broad power to allocate the use of factors of production. Between these two categories lie mixed economies that combine elements of market capitalist and of command economic systems. No economy represents a pure case of either market capitalism or command socialism. To determine where an economy lies between these two types of systems, we evaluate the extent of government ownership of capital and natural resources and the

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Unit 1.2 Economic Systems Learning objectives 1. Explain the classification of economic systems, and the strengths and weaknesses of different systems. 2. Explain the role of government in different economic systems. Now we turn to an examination of the type of economic system in which choices are made. An economic system is the set of rules that define how an economy's resources are to be owned and how decisions about their use are to be made. We will see that economic systems differ in terms of how they answer the fundamental economic questions. Many of the world's economic systems, including the systems that prevail in North America, Europe, and much of Asia and Central and South America , rely on individuals operating in a market economy to make those choices. Other economic systems, including those of Cuba and North Korea today and historically those of the former Soviet Union, Soviet bloc countries, and China.rely-or relied - on government to make these choices Different economic systems result in different sets of choices and thus different outcomes; the fact that market economies generally outperform the others when it comes to providing more of the things that people want helps to explain the dramatic shift from government -dominated toward market-dominated economic systems that has occurred throughout the world in the past decades. Under what circumstances will a nation achieve efficiency in the use of its factors of production? Why would decision makers throughout the economy want to achieve such efficiency? Economists assume that privately owned firms seek to maximize their profits. The drive to maximize profits will lead firms to allocate resources efficiently to gain as much production as possible from their factors of production. But whether firms will seek to maximize profits depends on the nature of the economic system within which they operate. Each of the world's economies can be viewed as operating somewhere on a spectrum between market capitalism and command socialism. In a capitalist economy, resources are generally owned by private individuals who have the power to make decisions about their use A market capitalist system is often referred to as a free enterprise economic system. In a command economy, the government is the primary owner of capital and natural resources and has broad power to allocate the use of factors of production. Between these two categories lie mixed economies that combine elements of market capitalist and of command economic systems. No economy represents a pure case of either market capitalism or command socialism. To determine where an economy lies between these two types of systems, we evaluate the extent of government ownership of capital and natural resources and the

Unit 1.2 Economic Systems Learning objectives 1. Explain the classification of economic systems, and the strengths and weaknesses of different systems. 2. Explain the role of government in different economic systems. Now we turn to an examination of the type of economic system in which choices are made. An economic system is the set of rules that define how an economy's resources are to be owned and how decisions about their use are to be made. We will see that economic systems differ in terms of how they answer the fundamental economic questions. Many of the world's economic systems, including the systems that prevail in North America, Europe, and much of Asia and Central and South America , rely on individuals operating in a market economy to make those choices. Other economic systems, including those of Cuba and North Korea today and historically those of the former Soviet Union, Soviet bloc countries, and China.rely-or relied - on government to make these choices Different economic systems result in different sets of choices and thus different outcomes; the fact that market economies generally outperform the others when it comes to providing more of the things that people want helps to explain the dramatic shift from government -dominated toward market-dominated economic systems that has occurred throughout the world in the past decades. Under what circumstances will a nation achieve efficiency in the use of its factors of production? Why would decision makers throughout the economy want to achieve such efficiency? Economists assume that privately owned firms seek to maximize their profits. The drive to maximize profits will lead firms to allocate resources efficiently to gain as much production as possible from their factors of production. But whether firms will seek to maximize profits depends on the nature of the economic system within which they operate. Each of the world's economies can be viewed as operating somewhere on a spectrum between market capitalism and command socialism. In a capitalist economy, resources are generally owned by private individuals who have the power to make decisions about their use A market capitalist system is often referred to as a free enterprise economic system. In a command economy, the government is the primary owner of capital and natural resources and has broad power to allocate the use of factors of production. Between these two categories lie mixed economies that combine elements of market capitalist and of command economic systems. No economy represents a pure case of either market capitalism or command socialism. To determine where an economy lies between these two types of systems, we evaluate the extent of government ownership of capital and natural resources and the

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**Sistema Económico:**<br /><br />Un sistema económico es el conjunto de reglas que definen cómo se deben poseer los recursos de una economía y cómo se deben tomar las decisiones sobre su uso. Los sistemas económicos varían en términos de cómo responden a las preguntas económicas fundamentales. Muchos de los sistemas económicos del mundo, incluyendo los que prevalecen en América del Norte, Europa y gran parte de Asia y América Central y del Sur, se basan en individuos operando en una economía de mercado para tomar esas decisiones. Otros sistemas económicos, como los de Cuba y Corea del Norte hoy en día y históricamente los de la antigua Unión Soviética, los países del bloque soviético y China, se basan en el gobierno para tomar estas decisiones.<br /><br />**Clasificación de los Sistemas Económicos:**<br /><br />1. **Capitalismo de Mercado (Free Enterprise):**<br /> - **Propiedad Privada:** Los recursos son generalmente propiedad de individuos privados.<br /> - **Toma de Decisiones:** Las decisiones sobre el uso de los recursos son tomadas por los propietarios privados.<br /> - **Ventajas:** Eficiencia en la asignación de recursos, innovación y crecimiento económico.<br /> - **Desventajas:** Desigualdad económica, competencia desleal y externalidades negativas.<br /><br />2. **Socialismo de Comandos:**<br /> - **Propiedad Pública:** El gobierno es el principal dueño de los capitales y recursos naturales.<br /> - **Toma de Decisiones:** El gobierno toma decisiones sobre el uso de los recursos.<br /> - **Ventajas:** Igualdad económica, bienestar social y reducción de desigualdades.<br /> - **Desventajas:** Ineficiencia en la asignación de recursos, falta de incentivos y corrupción.<br /><br />3. **Mistos Sistemas:**<br /> - **Propiedad Mixta:** Combina elementos de propiedad privada y pública.<br /> - **Toma de Decisiones:** Ambas partes, el gobierno y los individuos, participan en la toma de decisiones.<br /> - **Ventajas:** Beneficios de ambos sistemas, equilibrio entre eficiencia y equidad.<br /> - **Desventajas:** Complejidad en la gestión y posibilidad de conflictos de intereses.<br /><br />**El Papel del Gobierno:**<br /><br />- **Capitalismo de Mercado:** El papel del gobierno es limitado, principalmente regulando y supervisando el mercado para evitar abusos y asegurar la competencia justa.<br />- **Socialismo de Comandos:** El gobierno tiene un control completo sobre los recursos y toma todas las decisiones sobre su uso.<br />- **Mistos Sistemas:** El papel del gobierno varía, pero generalmente incluye regulación y supervisión, además de la provisión de servicios públicos y la redistribución de ingresos.<br /><br />**Eficiencia en el Uso de los Factores de Producción:**<br /><br />- **Eficiencia:** Se logra cuando los recursos se utilizan de la manera más efectiva para producir bienes y servicios.<br />- **Motivación:** Los tomadores de decisiones económicos buscan la eficiencia para maximizar la producción y el bienestar general.<br />- **Maximización de Profits:** En una economía de mercado, las empresas buscan maximizar sus ganancias, lo que impulsa la eficiencia en la asignación de recursos.<br /><br />**Conclusión:**<br /><br />Cada economía se puede ver como operando en algún lugar de un espectro entre el capitalismo de mercado y el socialismo de comandos. La ubicación exacta depende del grado de propiedad gubernamental de capitales y recursos naturales y de la extensión del control del gobierno sobre la toma de decisiones. Ninguna economía representa un caso puro de ninguno de estos sistemas.
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