Economic Systems
Who runs things
around here?
6th/7th Grade Social Studies
Mrs. Samples
SS6/7E5a
 a.
Compare how traditional,
command, and market
economies answer the
economic questions of
 1. What to produce
 2. How to produce
 3. For whom to produce
GPS: SS6/7E5
The Student will analyze different
Economic Systems.
E.Q. – How can I understand the 3
major Economic Systems?
What is an Economic System?

The way in which a nation
uses its resources to satisfy
the people’s needs and
wants.
Answers three basic questions:
1.
2.
3.
What will be produced - what kinds of goods
and services to produce (Food or Car,
airplanes, Equipment)
How will it be produced - how these good
are to be produced. Workers or Mechanized
machinery
For whom will it be produced - how the
goods and services will be distributed
among the people
Traditional Economic System

Society (the world we live
in) and culture determine
how goods and services
are made, sold, and
bought.
 Families, clans, or
tribes follow certain
customs to satisfy
their basic needs.
 Children often went
into the same type of
job as their parents
Traditional Economy (cont’d)
•Based
on primitive
methods and tools
•Subsistence farming, as
well as herding cattle
and hunting and
gathering
•Make their own
clothing and tools
Trade surplus for goods
made by others
•Found today in
underdeveloped,
agricultural parts of
South America, Asia,
and Africa.
TRADITIONAL ECONOMY (cont’d)


What is produced
and what each
person does is
determined by birth.
A person might be
expected to do what
his father did.
The share of wealth
is determined by
custom or one's
position in society.
Command Economic System



The government decides what
goods will be produced, how
they will be produced, and how
they will be distributed.
The individual has very little say
as to how the basic economic
questions are answered
What is produced and what
each person does might be
determined by a small group of
individuals.


Health, education, and
transportation is
available to all at little or
no cost to the people.
Everyone receives similar
pay so they don’t work
hard or go beyond
what’s expected of them.
Example: Cars

The government
decides:




What type of cars will
be made
How many will be
produced
Which colors they will
be produced in
The price they will be
sold for
Market
Economy



An economic system
based on individual
choice
What is produced and
what each person does is
based on supply and
demand.
Sellers decide for
themselves what goods
and services will be
produced.
MARKET ECONOMIC SYSTEM
 Individuals
decide for
themselves the answers to the
basic economic questions.
 The United States is classified
as a market economy.
Jimmy Choo
Mixed Economy



An economic system that has features of
traditional, command, and market systems
Countries with mixed economy try to use
the best parts of each system
Government and market makes decisions
about what is made, how much things
cost, and how much people are paid
Answer these questions with a
partner




How does the individual benefit from a
market economy?
Why is there little social mobility (moving
up in society) within a traditional
economy?
How might an individual benefit from a
command economic system?
What are the basic questions that all
economic systems must answer?
Create a chart in which
you would compare and
contrast the similarities
and differences between
a COMMAND and
MARKET economy. As you
complete your chart, keep
in mind the three basic
economic questions that
ALL economic systems
must answer............



WHAT TO MAKE ?
HOW TO MAKE IT ?
WHO GETS IT ?
ACTIVITY