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3 Economic Systems

Traditional, Command, and Market Economies.
by

Trey Coggins

on 14 November 2013

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Transcript of 3 Economic Systems

3 Economic Systems
Traditional Economy
What to produce? What people need to survive

How to produce it? Hunting, farming, & gathering (social roles determine who does what)

For whom to produce? Make their own products
(what they have always made)
Found in rural, non-developed countries (some parts of Asia, South America, and Africa)
Customs govern the economic decisions
Technology not used
Farming, hunting, and gathering are done the same way as the generation before
Activities are centered toward the family or ethnic unit
Men and women have different economic roles and tasks
Command Economy
What to produce? Whatever the government decides

How to produce it? However the government decides

For whom to produce? Class reward system Waiting in line / rations
Government or other central authority makes decisions about and determines how natural, capital, and human resources will be used.
Little individual freedom
No competition between businesses
Business are not run to create a profit
Consumers have few choices in the market
Factories are concerned about meeting quotas (not profit)
Government determines your job
Government sets the price of goods and services
Market Economy
What to produce? What people want to buy and sell

How to produce it? Supply and demand

For whom to produce? Determined by how much someone is willing to pay for it
Resources (capital and natural) are owned by individuals
Economic decisions are made by individuals competing to earn a profit
Individual freedom is considered very important
Based on supply and demand (if people are willing to buy it, then businesses will make it)
Profit is the motive for increased work rather than quotas
Competition between businesses
Many economic freedoms and choice in the market place
Competition determines prices which increase the quality of the product (you want to make the best and most inexpensive product, so consumers will buy your product instead of your competitor’s product)
No government intervention in the economy
ALSO CALLED CAPITALIST ECONOMY
Economies are not always easily defined as one type of market.
Most countries are considered Mixed, because they have elements of more than one type of economy.
Most industrial nations are a mixture of Market and Command.
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