1. WHAT WILL WE LEARN TODAY?
 Identify various economic systems
 We will gain understanding of the
advantages and disadvantages of
various systems
 To be able to analyse reasons to trade
internationally
 Also try to work out what the
various fruit represents?????

2. CLASS STRUCTURE FOR THE LESSON
1 – Market
economies
2 – International
trade
1 - Assess the
benefits of market
and mixed
market economies
2 – Determine the
pros and cons of
conducting business
internationally
3 – Analyse the
factors that may
make entering an
international
market difficult
Plenary

3. MIXED MARKET AND MARKET ECONOMIES

4. WHAT IS AN ECONOMIC SYSTEM?
 Market economic system
 Planned economic system
 Mixed economic system

5. MARKET ECONOMY
 Decisions regarding investment, production
and distribution are based on supply and
demand factors.
 Market economies can range from hypothetical
free market to regulated markets and
interventionist variants.
 Most existing market economies include a
degree of economic planning or government
direction and are classified as mixed
economies.
 In the real world, market economies do not
exist in pure form

6. ADVANTAGES OF A FREE MARKET ECONOMY
 A variety of goods and services available
 Businesses respond quickly
 Businesses will innovate
 There is no taxation

7. DISADVANTAGES OF A FREE MARKET ECONOMY
 Businesses will only produce goods and services
that earn a high profit
 Businesses will only sell products to consumers
who can afford to pay most for them
 Resources will only be employed if it is profitable
to do so (no NHS etc...)
 Harmful goods may be produced if it is profitable
to do so
 Some producers and consumers may ignore the
harmful effects of their decisions on others and
the environment
 Some firms may dominate the market supply of a
particular product (monopolies)

8. PLANNED ECONOMY
 Decisions regarding production and investment
are planned by central government and is
normally centralised.
 The goal of central planning is to allow
government to take advantage of shared
information and make informed decisions
regarding investment and the allocation of
economic resources.
 The extreme is when
government plan all areas
of the economy and this is
called a controlled system
economy

9. MIXED ECONOMY

10. THE MIXED ECONOMY
Somewhere in-between the 2 extremes
The government can:
 Provide services such as education
 Provide services such as street lighting
 Employ people who would otherwise be
unemployed
 Provide financial help to important businesses
 Introduce laws to protect the consumer and the
environment
 Regulate or break-up monopolies

11. PROBLEMS CREATED BY GOVERNMENT POLICY
 Disposable income is reduced due to taxation
 Increased costs to business of regulation
 Public sector organisations are often inefficient

12. MY WEEK
Don’t worry Matt
I’ll sort the taxes
Oh Pat you are my
hero, I wish I was
more like you

13. THE TRUTH

14. INTERNATIONAL TRADE

15. CONSUMER CHOICE AND OPPORTUNITIES FOR GROWTH
 Consumer choice
 Increased competition
 Business growth
 Free trade (workforces and technologies
anywhere in the world)

16. ADVANTAGES OF INTERNATIONAL TRADE
 Specialisation
 Consumers benefit from imported goods
otherwise not available to them
 Competition
 Economies of scale
 Best workforces

17. DISADVANTAGES OF INTERNATIONAL TRADE
 Competition
 Movement to less well
developed economies
 Global demand may be dominated
by certain developed/developing economies
 Social cost of transport pollution
 Loss of culture, uniqueness

18. BARRIERS TO FREE TRADE
 Tariffs
 Quotas
 Embargos

19. EMBARGOS
Sometimes called Boycotting i.e. To
boycott another country

20. ARGUMENTS FOR TRADE BARRIERS
 They help protect small businesses and new
industries
 They prevent dumping
 They prevent over-specialisation by protecting a
range of different industries

21. ARGUMENTS AGAINST TRADE BARRIERS
 They restrict consumer choice and opportunities
for new businesses and business growth
 They protect inefficient domestic businesses with
higher costs and often lower-quality products
 Other countries will retaliate by introducing
their own trade barriers

22. PROBLEMS ENTERING NEW MARKETS ABROAD

23. ENTERING OVERSEAS MARKETS
 There may be language barriers
 Different cultures, customs and tastes will need
to be understood
 The business must comply with different laws,
regulations and taxes
 The business must manage exchange rate risks
 There are increased risks of non-payment

24. OVERCOMING PROBLEMS ENTERING OVERSEAS MARKETS
 A business can use
local contacts
 A business can set up
assembly or sales only
business units
overseas
 It can enter into a
joint venture with an
overseas business
 A business can merge
with or takeover an
existing business

25. SO WHAT WAS THE FRUIT?
 It symbolised market structures
 Free market, all apples grow ungoverned
and the biggest and quickest fall first and
succeed in planting their seed
 Planned economy – government tell you
what to grown and where it goes
 Mixed economy – Somewhere
in-between, plus its a cool image
 World trade and choice

26. MIXED MARKET AND MARKET ECONOMIES

27. WHAT DID WILL WE LEARN TODAY?
 Identify various economic systems
 Understanding of the advantages and
disadvantages of various systems
 Reasons to trade internationally
 Some gibberish about fruit

28. BUSINESS ACTIVITY
1 – Market economies
2 – International trade
1 - Assess the benefits of
market and mixed
economies
2 – Determine the pros and
cons of conducting business
internationally
3 – Analyse the factors
that will make entering
international market s
difficult
Plenary