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

2. Why would people stand in line all day for one roll of toilet paper?
Soviet Union—1980’s
Why would people stand in line all day for one roll of toilet paper?

3. Economic Systems

4. Every society has an economic system in which people make and distribute goods and services.

5. WHAT IS AN ECONOMIC SYSTEM?
An economic system describes how a
society determines what to produce,
how to produce, and for whom to
distribute goods and services.

6. For whom will it be produced?
In any type of economic system 3 basic
questions must be answered.
What will be produced?
How will it be produced?
For whom will it be produced?

7. THE 3 ECONOMIC SYSTEMS
Traditional
Command
Market

8. TRADITIONAL ECONOMIC SYSTEM
A traditional economic
system is a community
based system in which all
factors of production rely
on customs and beliefs.
There is very little change.
Trade is usually very limited.
Today traditional economies
are not common.

9. TRADITIONAL ECONOMIC SYSTEM
What? Tradition, customs,
and beliefs decide what goods
and services will be produced.
How? Tradition, customs,
and beliefs decide how goods
For Whom? For people
who live in the community or
the village.

10. COMMAND ECONOMIC SYSTEM
In a command economy the factors of production is owned and controlled by the government.

11. COMMAND ECONOMIC SYSTEM
What? The government decides what products are needed.
How? Since the government owns all means of production, it decides how goods and services will be produced.
For whom? The government decides who will get what is produced.

12. MARKET ECONOMIC SYSTEM
In a market economic system the factor of production is controlled by individuals or corporations.

13. MARKET ECONOMIC SYSTEM
What? Consumers and producers decide what should be produced.
How? Consumers and producers decide how to produce.
For whom? Consumers.

14. IMPORTANT!
Traditional economies only make up a small part of a country’s economy.
There are NO PURE Market economies in the world.
There are NO PURE Command economies in the world.
All economies in the world have aspects of both command and market.

15. THEREFORE…
All modern economies in the world are MIXED economies. But the mix is different in every nation.

16. PURE COMMAND 0% PURE MARKET 100%
USA
77%
United
Kingdom
76%
Germany
74%
Russia
51%
PURE
COMMAND 0%
PURE
MARKET
100%
In which country do you think it would be the easiest to start a business?

17. 75.8
73.8
51.1
Percentage of Market

18. IDENTIFY THE ECONOMIC SYSTEM
For thousands of years, the Inuit parents have taught their children the survival skills needed to survive in the Arctic Circle’s severe climate. The children are taught to fish, hunt, and make effective tools. Once learned, these skills are passed down to the next generation. When the Inuit hunt, it is traditional for them to distribute the harvest with other families in the community.