TRADITIONAL ECONOMY
The basic economic decisions are
made according to long-established
ways of behaving.
Characteristics
Usually used by people who own their own
resources- tribal hunters
Behaviors unlikely to change and passed from
elders to youths
Tradition/customs answers the 3 major economic
questionsWhat and how much to produce (game and
enough to feed tribe)
How to produce (tools and methods)
Who gets the product (divided evenly, based
on role in the hunt, role in the tribe)
Freedom to make day to day decisions (hunt or
gather)
Where can you find it?
Very few exist: Parts of central and South
America, Africa, and Asia
COMMAND ECONOMY
The government or central authority
owns/controls factors of production
makes all basic economic decisions
Characteristics
Government usually in charge of transportation,
communication, banking, and manufacturing
(including job opportunities and wages)
Central planning group makes decisions of how, what,
and how much is produced.
Government decides what is produced and what is
purchased
Who gets goods and services varies: only the rich or
evenly divided
Little individual freedom
Where can you find it?
Economic system principles have existed for
thousands of years (Ancient Egypt to Soviet
Union)
Market Economy
(Free Market)
System in which private individuals make their
own choices about production, distribution,
and consumption.
Characteristics
All economic decisions made through bargaining (Free
enterprise, buyers and sellers)
Competition , profit, and investment are
vital to success
People who make
No one person or group runs the
more desirable
market economy
products or earn
Individuals free to make decisions
higher wages---can
(Capitalism):
buy more goods and
- How to use land, labor, and capital
services
- Choose own job/profession
- Choose to start own business
- Choose who will get what is produced
Where can you find it?
The US economy is based on the
Free Markets
Mixed Economy
A type of economy that
combines elements of the 3
main types
Characteristics
Most common form of economic system today
China: 1980’s- still command economy
1990’s started adding Free Enterprise Principles
Today, China is still
Communist but has some Free
Enterprise Principles
Characteristics
The U.S. is considered Free Market- but has
elements of a Command Economy
Government Command of specific
services:
Mail
Education
National
Defense
Highways
and Airports