ECONOMIC SYSTEMS

COMMAND ECONOMY

• Government makes all economic decisions
• This means that they answer all three economic questions
• The government also owns the factors of production
• Ex.- North Korea

ADVANTAGE/DISADVANTAGE

• Advantages:
• Organized, everyone works, and high production rate
• Disadvantages:
• No competition, corruption, no innovation

FREE MARKET

• No government involvement
• People are in charge
• Consumers and producers answer the three economic questions
• Factors of production are owned by individuals and privately owned businesses
• Ex.- Singapore

ADVANTAGES/DISADVANTAGES

• Advantages:
• Competition, freedom, market regulates itself
• Disadvantages:
• No regulations, no safety net

TRADITIONAL ECONOMY

• Relies on precedence
• Things are produced the way they've always been
• The people of the country own the factors of production
• A hierarchy decides who should share in the use of goods/services
• Ex. Haiti

ADVANTAGES/DISADVANTAGES

• Advantages:
• No waste, no restrictive government, everyone has a role
• Disadvantages:
• Natural disaster could damage resources, lack growth, limited resources

MIXED MARKET

• Mix of command, free market, and traditional economy
• Consumers, producers, and the government answer the 3 economic questions
• Mixed market economies have a mixture of each economy. They do not have fixed proportions.
• Ex.- United States

ADVANTAGES/DISADVANTAGES

• Advantages:
• freedom of choice, regulations, safety net, high standard of living
• Disadvantages:
• Loses tradition