Economic Systems Traditional Command and Market AllocationOwnership of

  • Slides: 8
Download presentation
Economic Systems Traditional, Command, and Market

Economic Systems Traditional, Command, and Market

• Allocation/Ownership of resources: • Based on rituals, habits, or customs • Historical

• Allocation/Ownership of resources: • Based on rituals, habits, or customs • Historical precedent • Source of Economic Decisions: • Based on custom and beliefs • People are NOT free to make own decisions • Role of Workers: • Family Tradition • Examples: • Don’t really exist anymore • Native American societies and India in the past were like this. Traditional Economy

• Advantages: • Family and community ties are strong • Sets economic roles

• Advantages: • Family and community ties are strong • Sets economic roles for all members • Stable, predictable, and continuous for life • Disadvantages: • Change is discouraged • Inefficient production • Lack of progress Traditional Economy cont.

• Allocation/Ownership of Resources: • Central government makes all decisions • Source of

• Allocation/Ownership of Resources: • Central government makes all decisions • Source of Economic Decisions: • Government • Roles of Workers: • Freedom to choose jobs is restricted • Examples: • Cuba, North Korea, China Command Economy (Communism)

• Advantages: • Capable of dramatic changes in a short time • Resources

• Advantages: • Capable of dramatic changes in a short time • Resources can be quickly re-routed • Income distribution is controlled by the gov. • Disadvantages: • Does not meet the needs of consumers • Lacks incentives to get people to work • New ideas are discouraged Command Economy cont.

• Allocation/Ownership of Resources: • Privately owned by individuals • People use own

• Allocation/Ownership of Resources: • Privately owned by individuals • People use own best interest to make a profit • Based on supply and demand • Source of Economic Decisions: • Individuals and businesses • Role of Workers: • Free to choose jobs • Examples: • United States, Great Britain, Japan Market Economy

• Advantages: • • Consumer choice is large Competition Consumer sovereignty Lack of

• Advantages: • • Consumer choice is large Competition Consumer sovereignty Lack of gov. interference • Disadvantages: • Rewards only productive resources • Little incentive to engage in unprofitable ventures. • Ex: caring for the old, sick, homeless Market Economy cont.

• Has characteristics of both Market and Command economies. • Most modern day

• Has characteristics of both Market and Command economies. • Most modern day economies are mixed. • The United States has a Mixed-Market economy. • Most businesses are privately owned by people, not the government • Government regulates things like: • Minimum wage • Child labor • FDA Mixed Economy

Economic Systems Traditional Command Market Mixed Economic SystemsEconomic Systems Traditional Command Market Mixed Economic Systems
Economic Systems Traditional Command Market Mixed Economic SystemsEconomic Systems Traditional Command Market Mixed Economic Systems
Economic Systems Traditional Command Market Traditional u AdvantagesEconomic Systems Traditional Command Market Traditional u Advantages
THREE ECONOMIC SYSTEMS Traditional Command Market TRADITIONAL ECONOMYTHREE ECONOMIC SYSTEMS Traditional Command Market TRADITIONAL ECONOMY
Economic Systems Traditional Command Market Traditional 1 WhatEconomic Systems Traditional Command Market Traditional 1 What
Economic Systems Economic Traditional Command Market and MixedEconomic Systems Economic Traditional Command Market and Mixed
Economic Systems Economic Traditional Command Market Not esEconomic Systems Economic Traditional Command Market Not es