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    Economic Systems

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    Nathaniel Lepasana
    The document discusses the three main economic systems: traditional, command, and market. It also describes a mixed economic system. Each system answers the three economic questions of what to produce, how to produce it, and who gets what is produced in different ways. A traditional system relies on long-standing customs, a command system uses central planning, and a market system uses supply and demand. Most modern societies use a mixed system that combines elements of each.

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    Economic Systems

    Uploaded by

    Nathaniel Lepasana
    147 views17 pages
    The document discusses the three main economic systems: traditional, command, and market. It also describes a mixed economic system. Each system answers the three economic questions of what to produce, how to produce it, and who gets what is produced in different ways. A traditional system relies on long-standing customs, a command system uses central planning, and a market system uses supply and demand. Most modern societies use a mixed system that combines elements of each.

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    The document discusses the three main economic systems: traditional, command, and market. It also describes a mixed economic system. Each system answers the three economic questions of what to produce, how to produce it, and who gets what is produced in different ways. A traditional system relies on long-standing customs, a command system uses central planning, and a market system uses supply and demand. Most modern societies use a mixed system that combines elements of each.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    147 views17 pages

    Economic Systems

    Uploaded by

    Nathaniel Lepasana
    The document discusses the three main economic systems: traditional, command, and market. It also describes a mixed economic system. Each system answers the three economic questions of what to produce, how to produce it, and who gets what is produced in different ways. A traditional system relies on long-standing customs, a command system uses central planning, and a market system uses supply and demand. Most modern societies use a mixed system that combines elements of each.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 17

    Economic Systems

    The Three Economic Questions


    And
    The Four Economic Systems
    Every society must answer three
    economic questions:

    • What goods and services should be


    produced?
    • How should these goods and
    services be produced?
    • Who consumes these goods and
    services?
    Four Economic Systems

     Traditional
     Command
     Market
     Mixed
    Traditional Economic System: Ritual,
    Habit, and Custom

     The basic economic questions are answered:


    by doing things the way they have always
    been done.
    Advantages
     Sets forth certain economic roles for all members of
    the community
     Stable, predictable, and continuous life
     Revolves around family
     Communities stay relatively close and small
    Disadvantages
     Discourages new ideas,
    new technology, and new
    ways of doing things
     Stagnation and lack of
    progress
     Lower standard of living –
    lack modern conveniences
     Have few mechanisms in
    place to deal with
    disasters such as floods,
    drought
    Command or Centrally Planned
    Economic System

    Basic economic questions of


    what, how and for whom
    to produce are answered:
    by a central planning
    authority.
    Advantages
     Central authority is in command of the economy
     Capable of dramatic change in a short time
     Little uncertainty over choice of career, where to
    work, or losing job
     Many basic education, public health, and other
    public services available at little or no cost
    Disadvantages
     Does not meet wants and needs of
    consumers
     Lacks effective incentives to get
    people to work
     Requires large bureaucracy, which
    consumes resources
     New and different ideas
    discouraged, no room for
    individuality
    Problems of a Centrally Planned Economy

    Centrally planned economies face problems of


    poor-quality goods, shortages, and diminishing
    production.
    Market Economic System:
    (Free Market, Capitalism)
    Buyers and Sellers: Dollars “Vote”

    The Basic economic questions are answered: by having


    buyers and sellers make economic decisions.
    Advantages
     Overtime, can adjust to change
     Individual freedom for
    everyone
     Little government interference
     Decentralized – not
    concentrated in the hands of a
    few
     Variety of goods and services
     High degree of consumer
    satisfaction
    Disadvantages
     Rewards only productive
    resources; does not
    provide for people too
    young, too, old, or too sick
    to work
     Workers/businesses face
    uncertainty as a result of
    competition and change: no
    guarantee for job
     Does not produce enough
    public goods such as
    defense, universal
    education, or health care
    Mixed Economic System
    The basic economic questions are answered:
    by combining traditional, state-run, and
    private enterprises.
    Mixed Economic System: No real
    disadvantages
     A combination a traditional, market, and command
    economies.
     Need government intervention – create laws
    protecting property rights and enforcing contracts
     Governments provide for national defense, roads and
    highway systems, conservation, environmental
    protection, education
     Key is to balance control and freedom
    The degree of government involvement in
    the economy varies among nations, and
    can affect its society.

    Continuum of Mixed Economies

    Centrally planned Free market

    Iran South Africa France United Kingdom Hong Kong

    North Korea China Botswana Canada Singapore


    Cuba Russia Greece Peru United States
    Essential Questions/Ideas
     How do societies provide the necessary items for their
    people?
     Who gets to decide?
     Which economic system fails to worry about its people’s
    wants?
     How does each system assign roles to play in the economy?
     When should government intervene in the economy?
     Which economic system do you think is most beneficial for
    everyone?
     Why?

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