3 Major
Economic Systems
By: Colby Jepson
Market
• In a Market Economy economic resources
are owned by the people.
• The profit margin is what runs this type of
economy "If I do this then I will be able to
do...."
• Market economy believes in Laissez-faire.
Market continue....
Product market
Monetary flow
Households
Physical Flow
Firms
Physical Flow
Monetary flow
Factor market
In a market economy you have product market as
well as factor market.
China
Advantages
People have complete control.
People are given the ability to chose what goes into
the economy, and what help is given.
Economic efficiency: responds fast and effect to
rapidly changing
Additional goals: free market offer a wide variety of
goods and services.
Disadvantages
People have complete control.
Government isn't able to help in
economic crises.
If a tornado went through China the people will have
to decide what aid is going to go out to those who are
most affected. Then decide what kind of finding is
going to be needed in order to start rebuilding and
cleanup.
Mixed
• Mixed Economy is a mixture of the features of both
the market and command economies.
• They have a private property as well as a public
sector.
• These are generally social infrastructure projects like
roads, highways, dams, defense etc...
• This way the country gets the best of both worlds.
Canada
Advantages
There is a balance between the people and the
government.
The people will have say in what funding should be
done in disasters, war, depressions etc...as well as
the government.
Through this economy there is a high efficiency of
goods produced.
Disadvantages
People and Government will always be arguing
what should or shouldn't be done to effect the
economy.
If a tornado went through Canada both
the people and government will be
affected and will have to figure out how
the economy have to adjust. Both the
people and government will have to
increase taxes to help pay for the
damage. Look into disaster aid from
other countries if they don't have one of
their own in place.
Command
• In a command economy government owns all the economic resources
and all the factors of production.
• The government decides the where the scarce economic resources go
and are produced.
• There is government regulation controlling almost every aspect of people's
lives.
• Since people do not own the economic resources, there is no place for
private initiative and no incentives at work.
• The political system which go with this economic style are called
communist, or socialism systems.
Iran
Advantages
Government has complete control over what is done
Government has say what is being produced and
how much.
A major goal of communism is to increase equity by
distributing goods and services fairly
Disadvantages
Government has complete control over what is done
Economic growth: command economies don't reward
innovation; they discourage change.
Command economies tend to be authoritarian
In Iran the government has complete control over
what aid will be given in a disaster such as a tornado.
Who will get the finding and emergency aid and how
much. The government will also have say in what cuts
are going to be made in order to pay for the recovery
of the disaster.
Iran
Command
Canada
Mixed
China
Market
Resources
Mr. Conant's notes
http://www.socialstudieshelp.com/
Economics_Circular_Flow.htm
Economics book
http://www.economicsonline.co.uk/How%20markets
%20work%20graphs/
Samuelson_what_how_command_economies.png
http://www.econmentor.com/fundamental-economicshs/economic-systems/3-major-economic-systems/
text/959.html#3%20Major%20Economic%20Systems