Spectrum of Economic System Means of production are

Spectrum of Economic System

�Means of production are privately owned. Supply and demand determine prices, and businesses are free to direct resources into activities that promise the greatest profits. Capitalism

Advantages � Efficiency � Freedom � Decentralized- consumers and producers work together � High degree of consumer satisfaction � Flexibility to accommodate change Capitalism

Disadvantages � Does not satisfy everyone’s needs � Ignores public goods � Produces only for demand…so it ignores the poor Capitalism

�Government owns and runs some of the basic productive resources in order to distribute output in ways deemed to be in the best interest of society �Most are democracies Socialism

Advantages � Those who are not fortunate or productive enough to earn it through competition still share in the benefits of society. � People use electoral power to influence decisions Socialism

Disadvantages � Less efficient � More workers are hired than needed � Taxes are generally higher � Workers are reluctant to work in these countries Socialism

�Political and economic framework where all property is collectively owned, labor is organized for the common advantage of the community, and everyone consumes according to their needs. �So far no one has achieved pure communism Communism

Characteristics Central planning authority rather than supply and demand � Government controls labor…no choice � Central planning authority makes all decisions and the state owns most of the major factors of production � Individual risk taking is forbidden � State decides what, how and for whom to produce � Communism Disadvantages

Disadvantages � Individual freedom is � Lacks incentives that lost encourage people to work hard � Fails to meet the needs and wants of consumers � Inefficiency of centralized planning � Inability to change and be flexible Communism