Comparing Economic Systems
Kaylee White
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Command
Characteristics:
Government, rather than individuals, answer key economic questions
Opposes private property, consumer choice, and competition
Authoritarian leaders and Communism are well related to this economy
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Advantages:
The government can regulate and manage what's being produced and how it's distributed easier
Guarantees jobs and income
Can be used to jump-start certain industries
Disadvantages:
Individual freedoms are sacrificed
Less incentive for workers to actually work
Change and entrepreneurship is discouraged
Example:
Cuba, whose government has a high level of control, including how much food costs and how much of it
you can buy.
Comparison
Free economy has producers and consumers
answer economic questions, allows private
property, and encourages economic growth.
Mixed economy has more freedom than
command, encourages entrepreneurship, and
has laws that regulate the marketplace.
O'Sullivan, Arthur, Steven M. Sheffrin, and Grant P. Wiggins. "Chapter 2: Economic Systems." Prentice Hall Economics. Upper Saddle River, NJ: Pearson/Prentice Hall, 2010. 29-44.
Mixed
Characteristics:
A blend of command and free economies
Government protects property rights
A market-based economy where the government has limited involvement
Advantages:
There's a better balance between government and producers and consumers
Peoples' rights and freedom are protected
Disadvantages:
What the government decides is important or necessary, like taxes to fund the army, education, or welfare could
cause debates or upsets by the citizens because they don't agree
Example:
America is a mixed economy, where people have the freedom to what they want, but there are laws and
guidelines that must be followed at the same time.
Comparison
Free economy gives consumers and producers
complete freedom to keep the economy going
and little government intervention is regulated.
Command economy has complete
governmental control, no private property, and
eliminates consumer choice.
O'Sullivan, Arthur, Steven M. Sheffrin, and Grant P. Wiggins. "Chapter 2: Economic Systems." Prentice Hall Economics. Upper Saddle River, NJ: Pearson/Prentice Hall, 2010. 29-44.
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Characteristics:
Free
A market of the economy that allows buyers & sellers to exchange things
Specialization instead of self-sufficient
There is a factor market and product market
Households are the participants (as well as consumers) in a free market economy, they own the factors of
production
Private property
Advantages:
Self- interest and incentive keeps the market going undeniably and efficiently
Economic growth is encouraged
A wider variety of goods and services are offered
Disadvantages:
There is more competition for producers to make a profit
Example:
There is no fully unregulated free market today, but it has been modified. A close example is Sweden, who has a
socialism system that coexists with their free market.
Comparison
Command economy involves extreme government
control, no change or entrepreneurship, and no
private property
Mixed economy allows for government intervention
with laws that protect property rights, keep the
marketplace fair, and supply needs.
O'Sullivan, Arthur, Steven M. Sheffrin, and Grant P. Wiggins. "Chapter 2: Economic Systems." Prentice Hall Economics. Upper Saddle River, NJ: Pearson/Prentice Hall, 2010. 29-44.