Economies

Major types of economies  Traditional economy  Command economy  Market economy  Mixed economy  Traditional economy  Command economy  Market economy  Mixed economy

What is an Economy?  Interaction between buyers and sellers in a market.  The economy encompasses everything:  the market itself  the buyers  the sellers  and the government that controls parts of the market.  Interaction between buyers and sellers in a market.  The economy encompasses everything:  the market itself  the buyers  the sellers  and the government that controls parts of the market.

Traditional economy  Local and deeply- ingrained customs decide how economic decisions are made.  There is little or no technology  Typically found in rural, non-developed countries.  Some parts of Asia, Africa, South America and the Middle East  Local and deeply- ingrained customs decide how economic decisions are made.  There is little or no technology  Typically found in rural, non-developed countries.  Some parts of Asia, Africa, South America and the Middle East

 The farmers and others who lived in Colonial America.  Men and women have rigid and separate roles.  People farm, hunt and gather, much as they have done for generations.  The farmers and others who lived in Colonial America.  Men and women have rigid and separate roles.  People farm, hunt and gather, much as they have done for generations.

Traditional  Trade and commerce have not yet developed.  People are limited to what they grow, gather, or hunt for themselves.  Economic activities are centered around the family or clan.  There is very little government involvement  Trade and commerce have not yet developed.  People are limited to what they grow, gather, or hunt for themselves.  Economic activities are centered around the family or clan.  There is very little government involvement

Command  The government makes decisions about how products and services are distributed.

Command  Consumers have limited choice in available products.  There may be adequate clothing but not in the latest styles and colors.  There may be adequate food, but not a great variety of restaurants.  Business are not run for a profit and there is no competition between businesses.  Consumers have limited choice in available products.  There may be adequate clothing but not in the latest styles and colors.  There may be adequate food, but not a great variety of restaurants.  Business are not run for a profit and there is no competition between businesses.

Command  People have fewer choices about where they want to work.  Shortages are common in command economies because there is no incentive to get products out faster.  The government or other central authority decides the price of goods and services.  People have fewer choices about where they want to work.  Shortages are common in command economies because there is no incentive to get products out faster.  The government or other central authority decides the price of goods and services.

Command  One advantage of a command economy is that changes can be implemented rapidly.  Examples of command economies include China, North Korea and Cuba.  One advantage of a command economy is that changes can be implemented rapidly.  Examples of command economies include China, North Korea and Cuba.

Command  The type of government most typically seen in a command economy is communism.  Communism is a form of government where almost all factors of production are owned by the government, which also makes all decisions.  The type of government most typically seen in a command economy is communism.  Communism is a form of government where almost all factors of production are owned by the government, which also makes all decisions.

Market  Consumers run the show.  Individuals make choices about what types of products they want.  Consumers are people who want to buy goods and services,  Producers are business people who want to sell goods and services to consumers.  Consumers run the show.  Individuals make choices about what types of products they want.  Consumers are people who want to buy goods and services,  Producers are business people who want to sell goods and services to consumers.

Supply & Demand  As more and more people demand a product, business people increase their production and distribution of the product.  If there is no demand for a product, if no one wants to buy it, then business people will either stop producing and selling it or risk losing even more money.  As more and more people demand a product, business people increase their production and distribution of the product.  If there is no demand for a product, if no one wants to buy it, then business people will either stop producing and selling it or risk losing even more money.

Market  Most economic resources are owned by individuals, not the government.  The profit motive drives people to start and improve businesses.  Competition between business to produce the best products/services at the best price gives consumers greater selection and lower prices.  Most economic resources are owned by individuals, not the government.  The profit motive drives people to start and improve businesses.  Competition between business to produce the best products/services at the best price gives consumers greater selection and lower prices.

Market  Other terms used to describe a market economy system include capitalism and the private enterprise system.  Most often associated with democratic governments.  Other terms used to describe a market economy system include capitalism and the private enterprise system.  Most often associated with democratic governments.

Mixed  In a mixed economy, there is a sharing of power between individuals and the government.  Individuals own businesses but there is more government regulation in order to protect consumers and workers from unfair practices.  The government associated with such economies may call itself democratic or socialist, or a combination of the two.  In a mixed economy, there is a sharing of power between individuals and the government.  Individuals own businesses but there is more government regulation in order to protect consumers and workers from unfair practices.  The government associated with such economies may call itself democratic or socialist, or a combination of the two.

Mixed  Socialist governments own part or all of the factors of production, depending upon the degree of socialism.  There are many countries with mixed economies and they range across the spectrum from light to moderate to heavy government control of business.  Examples of mixed economies include Sweden, Norway, and Germany, US, Cuba, Canada  Socialist governments own part or all of the factors of production, depending upon the degree of socialism.  There are many countries with mixed economies and they range across the spectrum from light to moderate to heavy government control of business.  Examples of mixed economies include Sweden, Norway, and Germany, US, Cuba, Canada

Examples  State run hospitals  Post offices  Mass transit  State run hospitals  Post offices  Mass transit