
What is the economic system?

What are the three basic kinds of economies?

Examples of Free Market Economies

Free Market Economy-In Detail

The Producer

The Consumer

How are resources allocated?

The Owners of Private Property

The Government

What is the economic system?
An economic system is procedures and rules of the production and consumption of
goods and services of a community regarded as a whole.

What are the three basic kinds of economies?
The three kinds of economies are the command economy which is an economy in
which resources and business activity are controlled by the government. The mixed
economy which is an economy in which some industries and businesses are
government-owned and some are privately owned and finally, the free market
economy which is an economic system in which businesses operate without
government control in matters such as pricing and wage levels.

Examples of Free Market Economies
Countries like Slovakia, Zimbabwe, Canada, USA, Poland, the Czech Republic,
Slovakia, Hungary, Romania, Bulgaria, Albania, and the former Yugoslavia, Turkey are
currently free market economies.

Free Market Economy-In Detail
Right now, we are going to focus on free market economy. To a certain extent, the
name ‘free market economy’, tell the people what the system of rule is for these
people. It is a system where every person is allowed to buy, sell or consume anything
they want.

The Producer
The producers are the people who provide the products which are used everyday, or
for leisure purposes. Their end of the system is to make as much profit as they can.
They are the suppliers of this system, and they work for self interest.

The Consumer
In this system, the consumers have the highest bid. If they demand a product more
then another, it has a huge effect on the producer’s, and the owners of private
property’s profits, where the two extremities are increasing it to abnormal profit, or
decreasing to the point of bankruptcy. The consumer’s goal is to gain for their self
interest.

The Owners of Private Property
While the producers work to maximize their profit, the owners of the private property
are the ones who provide the wages for them. The more the producers work, the
higher their wages are, and the more efficiently the jobs are done for the owners of
private property. This in turn increases the chances of the consumer choosing their
particular product over someone else’s.

How are resources allocated?
Resources are allocated according to the basic principal of demand and supply. If there
is a demand of oil, then the supplies must be increased. If the demand is low, and is
leading itself to bankruptcy, other measures must be taken to save face, as other
companies gain from the increase in demand in their own companies. Predictions of
what the consumers could/would do are made, and certain competition is felt, but
the actual turnout will be up to the consumers. The demand of self interest has supply
hard workers as they have supplied the financial organization with efficiency.

The Government
The government’s role in this economy is to increase and promote the social services
in the country, and to take of its citizens.
Work Cited
Documents provided in class.
Newitt, Malyn D. D. "Zimbabwe." Microsoft® Encarta® 2006 [DVD]. Redmond, WA:
Microsoft Corporation, 2005.
"Free-Market Economy." Microsoft® Encarta® 2006 [DVD]. Redmond, WA:
Microsoft Corporation, 2005.
Wolchik, Sharon L. "Slovakia." Microsoft® Encarta® 2006 [DVD]. Redmond, WA:
Microsoft Corporation, 2005.
Smith, DavidA., et al. "Europe." Microsoft® Encarta® 2006 [DVD]. Redmond, WA:
Microsoft Corporation, 2005.
Image: www.globescan.com/news_archives/pipa_market.html
www.globescan.com/news_archives/pipa_market.html
a) Inequality, producers, consumers, private control of companies, government, selfinterest.
b) The harder a person works to gain for self interest, the more work is done, and the
efficiency of one person increases, which in turn increases the economy’s efficiency.
Resources are allocated according to the basic principal of demand and supply. If there
is a demand of oil, then the supplies must be increased. If the demand is low, and is
leading itself to bankruptcy, other measures must be taken to save face, as other
companies gain from the increase in demand in their own companies. Predictions of
what the consumers could/would do are made, and certain competition is felt, but
the actual turnout will be up to the consumers. The demand of self interest has
supplied the two chief executives with more the twenty million dollars, as they
supplied the financial organization with efficiency.
Free Markey
Economy
Producers
Consumers
Owners of
Private Property
Create
Work Hard
for Self
Profit
Increas e
chance of
profit
Promote
s ocial
welfare
Government