Republic of the Philippines

COLEGIO DE SAN LORENZO RUIZ DE MANILA, INC.

J.P. Rizal Steet, Catarman, Northern Samar

INT’L TRADE AND AGREEMENT

CHAN, ZARINA B.
BSBA-3
OCTOBER 21, 2022
ACTIVITY #4 (PRELIM)

1. What are the 3 basic economic problems?

 What goods and services should be produced to meet

consumers’ needs? In what quantity? When should they
be produced?
 How should goods and services be produced? Who
should produce them, and what resources, including
technology, should be combined to produce them?
 Who should receive the goods and services
produced? How should they be allocated among
consumers?

2. What are the 3 economic system models? Define each briefly.

 Command Economy-In a command economy, what goods

and services are produced, how they are produced, and
for whom they are produced are all questions answered
by government planning. The government makes
economic decisions for the good of society. In a pure
command economy, all resources are owned by the
government, so the government can direct them to
produce what is best for society as a whole, rather than
what might be in the interests of private individuals. So
government owned the land, government owned the
businesses, and government even told people what their
occupations would be.
 Market Economy-In a market economy, resources are
owned by private individuals. The goods and services that
are produced are not determined by the government.
Rather, production is determined by businesses
responding to the wants and desires of consumers. (This
process occurs through the interaction of demand and
supply, about which we will have much more to say
starting next week.) Consumers determine what will be
produced. (You might have heard the expression
“consumer sovereignty,” which suggests that in a market
economy, consumers are king.)
  Mixed Economy-A mixed economy is a blend of market
and command economies. In a mixed economy some
parts or sectors of the economy are left to private
ownership (market) while in other sectors there is
substantial government ownership or government-
directed production (command). In a mixed economy,
government intervenes in those sectors where private
ownership is believed to be not in the best interests of
society as a whole. For example, in a mixed economy the
government might control the production and
distribution of health care (as in Great Britain and
Sweden). Mixed economies are relatively common in
Western Europe, in countries such as France, Sweden,
and Italy.

3. Which is the best economic system? Why?

 I believe that Social democracies that combine the

elements of both capitalism and socialism is the best type
of economic system. They have achieved high economic
growth while maintaining political freedom and personal
liberty  This model has been praised by political
scientist Torben Iversen, who lauds its goal of achieving
full employment and equality. This attempt has not been
entirely free of difficulties but overall has been very
successful, as the Scandinavian nations rank at or near
the top in international comparisons of health,
education, economic well-being, and other measures of
quality of life. The Scandinavian experience of social
democracy teaches us that it is very possible to have a
political and economic model that combines the best
features of capitalism and socialism while retaining the
political freedom that citizens expect in a democracy.
(Berman, 2006; Iversen, 1998; Lappi-Seppälä, 2007).
 Social democracies like the Scandinavian nations are
often called controlled capitalist market economies. The
word controlled here conveys the idea that their
governments either own industries or heavily regulate
industries they do not own. According to social scientist
Tapio Lappi-Seppälä of Finland, a key feature of these
social democracies’ economies is that inequality in wealth
and income is not generally tolerated. Employers,
employees, and political officials are accustomed to
working closely to ensure that poverty and its related
problems are addressed as much as possible and in as
cooperative a manner as possible.