Scribd
Upload
46 views17 pages

Economic Systems

The document discusses three main types of economic systems - traditional, command, and market. In a traditional economy, customs and beliefs dictate economic decisions about what to produce, how to produce it, and who gets the goods. A command economy gives the government control over production and resource allocation. A market economy relies on private buyers and sellers to determine production through supply and demand. Most modern economies are mixed, incorporating elements of both market and command systems.

Uploaded by

Afsana Ayrin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
46 views17 pages

Economic Systems

The document discusses three main types of economic systems - traditional, command, and market. In a traditional economy, customs and beliefs dictate economic decisions about what to produce, how to produce it, and who gets the goods. A command economy gives the government control over production and resource allocation. A market economy relies on private buyers and sellers to determine production through supply and demand. Most modern economies are mixed, incorporating elements of both market and command systems.

Uploaded by

Afsana Ayrin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

Economic

Systems
Economic Systems
Countries must decide how to
distribute its resources to meet the
needs of its people.

Countries do this through an


economic system.
Economic Systems
An Economic System is the
way a society organizes the
production, distribution, and
consumption of good and
services.
Economic Systems
There are 3 basic types of
economic systems that have to
answer three basic questions:

(1) What to produce?


(2) How to produce?
(3) For Whom to produce?
Economic Systems
 WHAT TO PRODUCE? (What kinds of goods and
services should be produced?)

 HOW TO PRODUCE? (What productive resources


are used to produce goods and services?)

 FOR WHOM TO PRODUCE? (Who gets to have the


goods and services?

 The way a society answers these questions


determines its economic system.
Types of Economic
Systems:
1. Traditional Economy

2. Command Economy

3. Market Economy
Traditional Economy
 An economic system in which economic
decisions are based on customs and
beliefs
 People will make what they always made
& will do the same work their parents did
 Exchange of goods is done through
Bartering: trading without using money
Traditional Economy
 Who decides what to produce?
 People follow their customs and make only
what is needed to take care of oneself
 Who decides how to produce goods &
services?
 People grow & make things the same way
that their ancestors did
 For Whom are the goods & services
produced for?
 Self and trading purposes (people
in the village who need them)
Traditional Economy
 Examples:
 Villages in Africa and South America; the
Inuit tribes in Canada; the caste system in
parts of rural India
 Strengths: Predictable job and lifestyle
 Weaknesses: Lack resources and limited
production
Command Economy
 Government makes all economic
decisions & owns most of the property
 Sometimes called communism
 Examples: Cuba, former Soviet Union,
North Korea
 This system has not been very
successful & more and more countries
are abandoning it
Command Economy
 Who decides what to produce?
 Government makes all economic decisions
 Who decides how to produce goods
and services?
 Government decides how to make
goods/services
 For Whom are the goods and
services produced for?
 Whoever the government decides to give
them to
Command Economy
 Strengths: people do not have to
worry about employment, housing,
education, and healthcare

 Weaknesses: consumers own


nothing, no choices/freedom, limited
innovation by individuals
Market Economy
 In a market economy, buyers and sellers answer
the three economic questions
 All resources are privately owned
 Who decides what to produce?
 Whatever the market demands that will produce
a profit
 Who decides how to produce goods and
services?
 Private producers (businesses)
 For Whom are the goods and services
produced for?
 Consumers who demand the product and are
willing to pay
Market Economy
 Strengths: People can start their
own businesses, more choice

 Weaknesses: The desire for money


may lead to poor quality of goods
and services, business owners have
to risk losing money
Mixed Economy
 Market + Command = Mixed
 There are no pure command or market
economies. To some degree, all modern
economies show characteristics of both
systems and are often referred to as mixed
economies.
 Most economies are closer to one type of
economic system than another
 For example, businesses own resources and
determine what and how to produce, but the
Government regulates certain industries
Mixed Economy
 Most democratic countries fall in this
category (there are no truly pure Market
or Command economies).
 Examples: U.S., Brazil, Mexico, Canada,
UK, etc.
Summarizing
Strategy

On a sheet of paper, write


down in which Economic
System you would prefer
to live and why.

25

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy