1. Economic Systems
Compare different types of economic systems: traditional, free enterprise, command and mixed.

2. Why Economic Systems?
Nations use economic systems to determine how to use their limited resources effectively.
Primary goal of an economic system is to provide people with a minimum standard of living, or quality of life.
Different types of Economic Systems
Traditional Economy
Market Economy (free enterprise & capitalists)
Command Economy
Mixed Economy

3. Market Economy (Free Enterprise)
Supply and demand of goods and services determine what is produced and the price that will be charged.
Advantage—competition to have the best products and services
Disadvantage—huge rift between wealthy and poor
Note: a true market economy does not exist.
Also called a Free Market Economy or Free Enterprise Economy. Also called Capitalist Economy
Businesses and consumers decide what they will produce and purchase and in what quantities
Decisions are made according to law of supply & demand
Private ownership
Private gains
Freedom of choice
Freedom of occupational choice
Goods and products reach the hands which have higher purchasing power

4. Command Economy Advantages Disadvantages
The government (or central authority) determines what, how, and for whom goods and services are produced. Regulated and managed by government.
Freedom of choice for producers and consumers is curbed to what a society can produce for all.
Determines pattern,level ,technology and distribution of total production
Two types:
Strong Command – where government makes all decisions (Communist– China, Cuba)
Moderate Command – where some form of private enterprise exists but the state owns major resources (socialism – France and Sweden)
Advantages
Guarantees equal standard of living for everyone
Less crime and poverty
Needs are provided for through the government
Disadvantages
Minimal choices
Fewer choices of items
No incentive to produce better product or engage in entrepreneurship
Also known as a Planned or Managed Economy

5. Mixed Economy
Combination of a market and a command economy
Government takes of people’s needs
Marketplace takes care of people’s wants.
The one which has public sector and private sector
Most nations have a mixed economy: United States, England, Australia
Advantage—balance of needs and wants met by government and in marketplace