Economic Systems and Resources

Chapter 31

Economy

The way that goods and services are produced, sold and consumed in a particular company

Factors of Production Availabilty depends on:

• Which goods and services can be produced

• What quantity of goods and services can be produced

• Who will be responsible for producing and distributing goods and services

• How the production and distribution of goods and services will be organised

Three types of Economic Systems:

• Centrally Planned

• Free Market

• Mixed Economy

Centrally Planned

Government controls the production and supply of all goods and services

Centrally Planned Advantages

All essential goods and services are provided for all citizens of the country

Centrally Planned Disadvantages

• Lack of range

• Higher prices due to lack of competition

• Low standard for businesses as no incentives

Free Market

People of a country are free to set up a business, legally

Free Market Advantages

• More range

• Lower prices due to competition

• Personal tax rates are lower

Free Market Disadvantages

• Standard for Public Services is lower

• Low social welfare payments

• Wealth not evenly distributed among citizens

Issuing Licences

What a government issues to control some areas of a business

Mixed Economy Disadvantages

• Limited Income available for spending on public services can result in long waits for medical procedures, higher prices and reduced levels of customer service

• Government regulation reduces competition

Why would a government restrict a business?

• Health and Safety

• Keep control over a supply of natural resources

• Protect the public

Three Sectors of the Economy

• Public Sector

• Private Sector

• Voluntary Sector

State-Sponsored Body

A business that is owned by the Irish state

Services provided by local authorities

• Council Houses and flats

• Public Parks and green areas

• Services and housing for the Travelling Community

• Public libraries, museums and theatres

• Street lighting and other essential services

• Planning permission service

• Refuse collection

Local Authority examples

• South Dublin County Council

• Galway County Council

• Wicklow County Council

The Circular Flow of Income

What can affect the flow of income?

• Savings

• Taxation

The Circular Flow of Income - 2