Warm Up

• Get textbook• How does specialization make an

economy more efficient?– Specialization leads to the efficient use of

capital, land, and labor by allowing people to do that which they can do best and with the least waste of resources

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Modern EconomiesIn this lesson, students will identify characteristics of modern economies.

Students will be able to define and/or identify the following concepts and terms:

Mixed EconomyLaissez-faire

Free Enterprise

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Just as this apple is not perfect, economicsystems are not perfect. While a centrallyplanned economy has many problems, afree market economy is far from perfect.

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A Mixed Economy• A mixed economy combines elements of

different economic systems to meet the needs of the society.

• While modern economies are mixed, every mixed economy is slightly different from every other mixed economy.

• Some nations lean more towards central planning with some private ownership while other nations are predominantly free market with limited government intervention.

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The Chinese communists seized powerin 1949. However, today, the Chineseembrace elements of the free market.

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The Chinese communists realized that workers needed incentives or reasonsfor increasing productivity.

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The United States is a mostly freemarket economy. However, the government does intervene in themarket.

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It is important to remember that manyabuses occurred in a totally free market.Child labor is one example of thisabuse.

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Laissez-faire

• Laissez-faire was the belief that the government should not intervene in the market.

• It meant “let them do (as they please).”

• It allowed businesses to operate without any restrictions.

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Without government intervention, warninglabels would not exist.

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Heroin could be purchased in yourlocal supermarket.

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Government intervention protectsour environment and our lives.

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Free Enterprise

• The United States’ economic system is called the Free Enterprise system.

• A Free Enterprise system is a mostly free market economy with limited government intervention.

• The government does intervene in the economy when it is in the public interest.

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So, modern nations have mixed economies.However, like milkshakes, mixed economiesare not mixed the same.

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Questions for Reflection:

• Define a mixed economy.• What problems are created by central

planned economies?• What problems are created by free market

economies?• Define Laissez-faire.• What is the Free Enterprise system of the

United States?