1.4 How To Organize Economies: An Overview of Economic Systems

We can organize societies as traditional, command, or market-oriented economies. Most societies are a mix.

The last few decades have seen globalization evolve as a result of growth in commercial and financial networks

that cross national borders, making businesses and workers from different economies increasingly

interdependent.

Self-Check Questions

1. What is scarcity? Can you think of two causes of scarcity?

2. Residents of the town of Smithfield like to consume hams, but each ham requires 10 people to produce it

and takes a month. If the town has a total of 100 people, what is the maximum amount of ham the

residents can consume in a month?

3. A consultant works for $200 per hour. She likes to eat vegetables, but is not very good at growing them.

Why does it make more economic sense for her to spend her time at the consulting job and shop for her

vegetables?
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