The document compares different types of economic systems: traditional, free market, command, and mixed. It defines each system and provides examples. A traditional economy relies on customs and family ownership. A free market economy uses supply and demand with minimal government. A command economy has the government control production and distribution. Most countries now use a mixed economy with public and private aspects.
2. Economics studies how individuals and societies seek
to satisfy needs and wants through incentives,
choices, and allocation of scarce resources.
Technology
Land
Oil & fuel Doctors
3. Na tions mus t a ns we r thre e ba s ic Economic
que s tions :
Wha t goods a nd s e rvice s s hould be produce d?
How s hould the goods a nd s e rvice s be produce d?
For who s hould the goods a nd s e rvice s be produce d?
The wa y a na tion a ns we rs the s e que s tions
de fine s the ir e conomy.
4. Scarcity forces all Scarcity leads to
countries to answer conflict
these 3 questions
5. Economic Resources
Natural Resources – raw materials found in nature
that are used to produce goods
Human Resources – people’s knowledge, efforts, and
skills used in their work
Capital Resources – used to produce goods and
services (buildings, materials, and equipment)
Entrepreneurial Resources - recognize the need for
new goods or service
Scarcity – shortage of resources
6. Nations use economic systems to determine
how to use their limited resources effectively.
Primary goal of an economic system is to
provide people with a minimum standard of
living, or quality of life.
Different types of Economic Systems
▪ Traditional Economy
▪ Market Economy (free enterprise)
▪ Command Economy
▪ Mixed Economy
7. Defined: An economic system that does
things as it always has
Ownership of Resources: All productive
resources are owned by families
Allocation of Resources: Based of customs
and traditions within the tribe
Role of Government: Tribes play some role in
making economic decisions
8. Found in rural, under- Economic activities are
developed countries– centered around the family or
Vanuatu ethnic unit
Pygmies of Congo Men and women are given
Eskimos & Indian tribes different economic roles and
tasks
Belarus
Advantages: people have
Customs govern the specific roles; security in the
economic decisions that are way things are done
made Disadvantages: Technology is
Farming, hunting and not used; difficult to improve
gathering are done the same
way as the generation
before
9. Goals: Keep things how they have always been
Methods: Customs and traditions passed down
through family lineage
Characteristics: Children follow in parent’s
footsteps, lack of economic growth
Current Examples:
Aborigines Australia Mbuti Pygmies of the Congo Kung Bushmen of Africa
Political System: Tribal Organizations
10. Also called a Free Market Supply and demand of goods
Economy or Free Enterprise and services determine what
Economy is produced and the price that
Businesses and consumers will be charged.
decide what they will Advantage—competition to
produce and purchase and in have the best products and
what quantities services
Decisions are made Disadvantage—huge rift
according to law of supply & between wealthy and poor
demand Note: a true market economy
does not exist.
11. Allocation of Resources: Resources are
obtained through the lure of profits in the
market
Role of Government: Government only tries
to make sure there is some competition and
provides some public goods
12. Goals: Profit for individuals, people are motivated
by economic rewards
Methods: Competition, supply and demand
Characteristics: Private property, specialization,
minimal government regulation
Political System: Democracy/Parties
Current World Examples:
Switzerland Canada Australia Chile Argentina South Africa
13. An e conomic s ys te m cha ra cte rize d by priva te
owne rs hip of bus ine s s e s a nd ma rke tpla ce
compe tition
The gove rnme nt is conce rne d a bout its pe ople
a nd ta ke s ca re of thos e who ca nnot ca re for
the ms e lve s
The politica l s ys te m is a de mocra cy with le a de rs
e le cte d by the pe ople
The Unite d S ta te s a nd J a pa n a re e xa mple s of a
Ca pita lis t Economy
14. The government (or central Advantages
authority) determines what, Guarantees equal standard of
how, and for whom goods living for everyone
and services are produced. Less crime and poverty
Two types: Needs are provided for
Strong Command – where through the government
government makes all Disadvantages
decisions (communism – Minimal choices
China, Cuba) Fewer choices of items
Moderate Command – No incentive to produce better
where some form of private product or engage in
enterprise exists but the entrepreneurship
state owns major resources
(socialism – France and Also known as a Planned or
Sweden) Managed Economy
15. Goals: Equal distribution of income
Methods: Revolution to gain control, no opposition
forces allowed
Characteristics: no private property, one political
party
Political System: Totalitarian
Current and Former World Examples:
Cuba North Korea China Former Soviet Union
16. The gove rnme nt runs e ve rything (Tota lita ria n
gove rnme nt)
Only one politica l pa rty, the Communis t pa rty,
runs the gove rnme nt
All pe ople a ble to work a re a s s igne d jobs – the re
is virtua lly no une mployme nt
The gove rnme nt a s s igns hous ing, s chools , a nd
occupa tions
The re is little to no e conomic fre e dom
Cuba , North Kore a , a nd China a re e xa mple s
17. Combination of a Most nations have a mixed
market and a economy: United States,
command economy England, Australia
Government takes of Advantage—balance of
people’s needs needs and wants met by
government and in
Marketplace takes care
marketplace
of people’s wants. Disadvantage—citizens
have to pay taxes
18. Incre a s e d gove rnme nt involve me nt in pe ople ’s
live s a nd the e conomy
The ma in goa l is to ke e p price s low for a ll pe ople
a nd to provide e mployme nt for ma ny
The gove rnme nt runs ke y indus trie s a nd ma ke s
e conomic de cis ions
More s ocia l s e rvice s for a ll a nd fre e or low cos t
me dica l ca re
Ca na da , Ge rma ny, S we de n, Aus tra lia a nd Gre a t
Brita in a re a ll e xa mple s of s ocia lis t e conomie s
19. Command Economy S ocialism Market Economy
Com unism
m Left of center but right Capitalism
On the far left of communism On the far right
20. The bre a kup of the S ovie t Union is the be s t
e xa mple of a country cha nging from a
Comma nd Economy to a Ma rke t Economy
S ta te owne d indus trie s ha ve be e n priva tize d
(gove rnme nt owne d bus ine s s e s a re s old to
priva te citize ns )
Toda y e ve n s ocia lis t countrie s a re s e lling s ome
of the ir gove rnme nt owne d bus ine s s e s to
individua ls