TYPES OF ECONOMIES
What to produce?
How to produce?
For whom to produce?
EXAMPLES
Traditional Economy
Customs and geography
determine what is made.
Command Economy
The government or
other central authority
determines what to
make.
Generally, products are
farmed, hunted or
gathered. Modern
technology is rarely
used. People are usually
assigned the same role
their parents were given.
The government or
other central authority
decides how to use
scarce resources. This
includes deciding who
works where.
Market Economy
Individuals’ desires determine
what is made. If consumers
want a certain product and
can pay for it, then they have
created “demand” for that
product. Other individuals
(producers) will “supply” the
product, to make a “profit”.
Mixed Economy
The government and
individuals share the
decisions on what to
produce.
Producers will start companies It is up to individuals to
to make these products and
creatively decide how
“compete” with other
to meet demand by
companies to make a
starting businesses, but
profit. They have to creatively the government
1) cut costs in making the
passes laws and
products (e.g. technology) and regulations to guide
2) attract more customers.
these businesses.
Generally, just enough is
The government
Generally, only individuals who Generally, only
made to feed one’s
decides who gets which can afford products will get
individuals who can
family. When you make
products. Most modern them.
afford products will get
barely enough to eat, this governments with
them, but the
is called subsistence-level Command Economies
government also
living.
claim that they will fairly
creates programs to
distribute products.
redistribute some
wealth to the lower
socio-economic class.
-Modern indigenous tribes -Cuba
-The Commercial Revolution of -The United States
in South America.
the 12th-16th Centuries
-North Korea
-Japan
-Modern tribes in Africa,
-There is no pure market
like the Mbuti
economy today, though the
-People’s Republic of
-Most Western
U.S. is heavily influenced by it. European Countries
China
-Manorial system in
Medieval Europe
-The “Star Trek” world