S. Holmes
ECONOMIC
SYSTEMS
3 economic
questions are
answered by:
Advantages
Traditional economy
Command economy
Market economy
Scare resources are used by
ritual, habit, or custom of
people
 Stable & predictable
life
 Little uncertainty
over what, how, or
for whom to
produce
 Certain economic
roles for all
members of the
community
Central authority of the
Government (dictator, president,
or king)
 Change can happen
quickly & drastically for
economic production
 Public health services are
available for everyone
(little or no cost)
 Little uncertainty over
choice of career, where to
work, or losing job
People (consumer/buyers &
Businesses/sellers)
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Disadvantages
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Examples of
countries
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Other
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Discourages new
ideas & new ways of
thinking and doing
things
Lack of progress
Lower standard of
living
Lack of innovation
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Does not meet wants and
needs of consumers
Reduce the quality of
goods (fill a quota)
Lack rewards or incentives
for people work & to
produce products
Restricts property rights
Little freedom
Central African
Mbuti
Australian
Aborigines
Inuit (Canada)
If your father was a
hunter then you
would be a hunter
Punish people who
act differently
Produce things that
have been produced
in the past, the way
it was produced in
the past
Whoever usually
received the
products will again
receive them
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Cuba
North Korea
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Government makes major
economic decisions
Government decides what
should be produced &
owns most of the means
of production
Government does the
planning for production
(factory locations,
occupations of workers &
their salaries)
Government controls the
distribution system for
housing, transportation,
consumer items
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High degree of
freedom to make
choices
Lack of government
interference
Large variety of goods
& services
Small degree of
government
interference
Able to adjust
gradually to change
Does not provide for
everyone’s needs
Uncertainty for
workers & business as
a result of
competition & change
Does not produce
enough public services
such as defense,
education, and
healthcare
United States
Japan
Germany
US has a modified free
enterprise system
Often called
capitalism
Business leaders
choose the means of
production
Goal is to have the
most efficient and
profitable methods
Consumers incomes
determines who
receives which
goods/services