Introduction to Economic Systems

We will be able to compare each different economies.

We will learn what is produced is each system.

We will learn how those things are produced.

We will learn for whom those things are produced.

Traditional system

Command system

Mixed economy

Capitalist system

Things are done the way they always have been done.

Past customs and habits are used to decide what and how goods will be produced, distributed and consumed.

Members of this system know from an early age what their role/job in society will be.

People musts fulfill their traditional role. (What has been passed from their grandparent to their parent to them.)

These are found today in developing/poor countries.

The government controls production and makes all the basic decisions.

The government even decides the role everyone will play and guides people into certain jobs. The people don't pick them themselves.

The government decides what goods will be made, how much everything will be sold for and how much people will be paid.

People do not own farms or businesses. These are owned by the government.

The people are told you have this long to make this much stuff. (Quota) If they don't, there is a shortage.

Also called a market system

The government does not get involved in this system.

People decide what the factors of production and answers to basic economic questions.

The market is the freely chosen activities between the buyers and the sellers.

There is a supply and a demand. The supply is what goods are available, and the demand is how many people want to buy those goods.

This is a mix of market and command systems.

The government can have laws to regulate some businesses.

The government can step in where there are some inequalities in this system to help figure things out.

What goods and services should be produced?

How should the goods be produced?

Who should the goods be produced for?

Land: provides the natural resources

Labor: provides the man power

Capital: provides the equipment and tools

Entrepreneur: the business person who provides the idea