1. A unit about Traditional, Market, &
Command Economies.
2. Three little Questions
• When developing the economic plan, each country must ask three basic
economic questions:
1. What goods/services will be produced?
2. How will goods/services be produced?
3. Who will consume the goods/services?
The way a country answers these questions determines what kind of
economic system it will have:
1. Traditional 2. Command 3. Market
4. Mixed
3. Traditional Economy
• All economic decisions are based on customs, traditions, &
beliefs of the past.
•People will make what they always made & do the same things
their parents did.
•The exchange of goods is done through bartering.
•Bartering = trading without using money
•Some Examples: villages in Africa & South America, the Inuit
in Canada, Aborigines in Australia
4. Traditional Economy
Let’s see how a traditional economy fits in with the 3 economic
questions…
1. What goods/services will be produced?
• People follow tradition &
make what their ancestors
made.
2. How will goods/services be produced?
• People produce goods the same
way that their ancestors did.
3. Who will consume the goods/services?
• People in the village who need
5. Command Economy
•The government owns resources
•It also controls production of goods,
prices, and wages.
•Prices of goods are set low by the
government which leads to shortages
•Many resources are used for military
goods
6. Command Economy
Let’s see how a command economy fits in with the 3 economic
questions…
1. What goods/services will be produced?
• Government decides what will
be produced.
2. How will goods/services be produced?
• Government decides how to
make them.
3. Who will consume the goods/services?
• Whoever the government
decides to give them to.
7. Market Economy
• In a truly free market economy, the government would not be
involved at all. Scary…
•There would be no laws to make sure goods/services were
safe. *Food and Medicine
•There would be no laws to protect workers from unfair
bosses.
•Because of this, there are no PURE market economies, but
some countries are closer than others.
• Some Examples: US, UK and Australia
8. Market Economy
Let’s see how a market economy fits in with the 3 economic
questions…
1. What goods/services will be produced?
• Private businesses
2. How will goods/services be produced?
• Private businesses
3. Who will consume the goods/services?
• Consumers
9. Mixed Economy
• This type of economy has companies
owned by both citizens and the
government
• Citizens own the majority of resources
• Citizens decide what to produce and how
• Certain industries are regulated by the
government
10. Let’s see how the Mixed Economy fits
in with the 3 economic questions
•1. What goods and services will be
produced? Most decisions are made by
individual businesses
•2. How will goods and services be
produced? Most decisions are made by
individual businesses
•3. Who will consume the goods and
services? Consumers
11. The Economic Timeline (copy this on the back
of your notes)
Command Mixed
Market
North
Korea
USUKGermanyRussia Australia
23. Let’s Review
1. What are the three basic questions that every economic system must
answer?
2. What are the three economic systems?
3. Which economic system allows for the most individual freedom?
4. In which economic system does the government have the most
control?
5. In which economic system do individuals do things based on
customs & beliefs?
6. What is the economic system of most communist countries?
7. How do traditional economies exchange goods?
8. Which country is closest to a true Market economy?
9. Most democratic countries have which type of economic system?
24. Your opinion
Use your Economic Systems Guided
Notes to write a 5 sentence paragraph
that answers this question:
Which economic system do you
think is best?
Make sure that you give specific details
from your notes supporting why you
chose this economic system as your 3
25. Scoring Guide for Paragraph
• Focus: Addresses prompt appropriately and maintains a clear, steady focus
and provides a generally convincing position. Score 1-3
• Reading/Research: Accurately gives details from reading materials that
applies to the purpose of the prompt/claim. Score 1-3
• Development: Presents appropriate and sufficient details to
support/develop the claim Score 1-3
• Your score on the three categories will be added and divided by 3 for your
final score.
