1. Command, Market, and Traditional
Economic Systems
Command, Market, and Traditional

2. GPS and E.Q.
GPS: SS6E5a. Compare how traditional, command, and market systems answer the basic economic questions (What, how, and for whom to produce).
E.Q. How do different economic systems answer basic economic questions?

3. Definitions:
ECONOMIC SYSTEM: The way in which a country manages the production and distribution of goods and services.
Quota: Government limits the number/
amount of an item
Scarcity: Limited supply of something

4. All economic systems must answer 3 basic economic questions.

5. 1. WHAT TO MAKE?

6. 2. HOW TO MAKE IT?

7. 3. WHO GETS IT?

8. WHAT ARE THE THREE MAJOR ECONOMIC SYSTEMS?
1. Traditional
2. Command
3. Market

9. 1.TRADITIONAL ECONOMIC SYSTEM
People are expected to do what their parents did.
People are rich or poor based on their social level.
Farming, hunting/gathering, and cattle herding are examples of a traditional economy.
No country in Europe today has this system.

10. 2. COMMAND ECONOMIC SYSTEM
A government committee decides what job a person will do and what/how much a company will make.
The government owns all the businesses.
The government assigns each worker a quota to meet.
The former Soviet Union was an example of a command economy. Russia’s government has allowed some individuals to own some businesses.

11. 3. MARKET ECONOMIC SYSTEM aka “free enterprise”, capitalism” or “laissez-faire”
Buyers and sellers make decisions based on marketplace prices.
Law of supply (amount of goods) and demand (how many people want the goods) determines price people pay.
Individuals own businesses.
The most of Europe is a market economy. The U.K. is the most free (few government rules)

12. Now that you know the three major economic systems, REMEMBER that no system is perfect and no system exists by itself.
Most economies are MIXED.

13. CRCT Test Prep page
375. In the U.K., who decides which goods will be produced and sold?
Business owners
376. Which country owns most of the large and important industries within its borders?
Russia
377. Which is LEAST likely to be found in Europe?
Traditional economy

14. Summary
Create a Venn diagram to compare and contrast the similarities and differences between a COMMAND and MARKET economy.
As you complete your Venn diagram, keep in mind the three basic economic questions that ALL economic systems must answer
WHAT TO MAKE ?
HOW TO MAKE IT ?
WHO GETS IT ?

15. Compare/Contrast Economic Systems
Command
Market

16. Compare/Contrast Economic Systems
Command
Market
Government committee tells you what, how, and for whom to produce.
Individuals decide based on the market what, how, and for whom to produce.
What, how, and for whom to produce?