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Overview of Economic Systems

This document outlines different types of economic systems: traditional economies where people produce what they need to survive and do not advance; command economies where the government owns production and decides what is produced; and market economies where private ownership is allowed and supply and demand determine production. It also discusses mixed economies, which combine elements of command and market economies, and notes that most countries today have mixed economies.

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4K views4 pages

Overview of Economic Systems

This document outlines different types of economic systems: traditional economies where people produce what they need to survive and do not advance; command economies where the government owns production and decides what is produced; and market economies where private ownership is allowed and supply and demand determine production. It also discusses mixed economies, which combine elements of command and market economies, and notes that most countries today have mixed economies.

Uploaded by

api-275304033
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Economic Systems Notes

RESOURCES-Things people use.


Ex: Money, oil, timber, machines.
 Are limited
 Not enough to meet every need.
ECONOMICS-Study of how people, businesses, and
countries use limited resources.
 Answers the 3 basic economic questions(see
graphic organizer)
TRADITIONAL ECONOMIES-People produce what
they need to survive (BASIC)
 Inherit their position from parents.
 Not expected to advance
 Ex: Farmers remain farmers, etc…
 Produce by the need to survive
 NOT MUCH CHANGE

COMMAND ECONOMIES-The government owns the


means of production (capital)
 Most businesses and property belong to the
state
 Government decides what will be produced and
in what amount (Answers the 3 basic
economic ?’s).
 GOAL: Economic equality
 Keep people from being too rich or too poor.
 Rarely work
 Inefficient(poorly made goods)
 Money earned is limited
 Workers are not productive
o Why? No incentive (reason) to work hard
MARKET ECONOMIES-Allow for private ownership
or businesses and property.
 Opposite of command
 Also called “capitalist” for encouraging
capitalism
 CAPITALISM-Supports the private ownership of
property and the pursuit of profit in business.
 Very little government regulation
 The market demand (what people want to buy)
determines what will be produced rather than
the government.
 MARKET-Wherever buyers and sellers exchange
money and goods.
 Businesses are free to produce what they want.
 Buyers are free to buy what they want.
 Operate more efficiently than command
economies.
 Produce new and better ways of doing things—
BUSINESSES MUST COMPETE for CONSUMER’S
MONEY
 Incentive to work hard
 PROFIT-Amount of money businesses make
after paying the cost of producing their product
(good or service)
 Downside—Produces “haves” and “have
nots”—A few rich people, a large middle class,
and a poor lower class.
 No guarantee of equality in a market economy.
MIXED ECONOMY-Not totally command or totally
market. Partly both.
 Most economies are mixed
 The United States is not a totally market
economy.
 Overall the government is supposed to let the
market operate as freely as possible.
 China places strict control on its economy.
 Many of its businesses are owed by the
government.
 Both the United States and China are examples
of mixed economies.

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