Gr9 EMS: Eco. & Entr. | Term 1 | Lesson 2 | Economic systems - Market economy

Market Economy

The lesson introduces the market economy, the second economic system covered in the course, and compares it with the planned economy.

Key Terms

• Economic system: The way a country allocates resources for production and distributes goods and resources for people to consume.
• Economic problem: People have unlimited needs and wants, but resources are limited.
• Planned economy: An economic system in which the government makes decisions about producing and consuming goods and services.
• Market economy: Also called capitalism, this is an unplanned economic system in which private individuals own land, property, and businesses rather than the government.

Characteristics

In a market economy, individuals and businesses take the lead in economic decisions. Key characteristics include:

• Profit: Businesses aim to make a profit.
• Entrepreneurship: Entrepreneurs decide what to produce and how much to charge, based on what they think consumers will pay.
• Money and investment: Businesses and individuals can seek loans or investment from banks and investors.

The United States, England, and Japan are given as examples of market economies. The lesson illustrates entrepreneurship with an example of someone deciding how many coffee beans to buy and what kind of coffee to sell.

Advantages

• Market economies are flexible and can adapt quickly to change.
• Individuals can choose what to produce and set prices.
• Consumers can choose from a wide range of products.

Disadvantages

• Wealth can be distributed very unevenly, leaving some people rich and others poor.
• Businesses may prioritise profit over citizens’ welfare.
• Businesses may make products available that can harm consumers.

Review and Next Lesson

The lesson ends with a fill-in-the-blanks activity to review the material. Learners are encouraged to complete a self-marking assessment. The next lesson covers the mixed economy.

Speaker and Source

• Presenter/narrator: An unnamed teacher from Thuma Mina Teaching.