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Introduction To Economics Notes

This document discusses different types of economic systems: traditional, command, and market. A traditional economy relies on customs to determine production and jobs. A command economy has the government control production, wages, and prices. A market economy bases decisions on supply and demand, with people free to own businesses. Most modern economies are mixed, combining aspects of command and market systems.

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341 views12 pages

Introduction To Economics Notes

This document discusses different types of economic systems: traditional, command, and market. A traditional economy relies on customs to determine production and jobs. A command economy has the government control production, wages, and prices. A market economy bases decisions on supply and demand, with people free to own businesses. Most modern economies are mixed, combining aspects of command and market systems.

Uploaded by

api-130087742
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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N

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ECONOMICS
No country has every resource it
needs or wantsthis is called
Scarcity.
Scarcity: the limited supply of
something
Every country must decide how
to distribute its resources to
meet the needs of its people.
They do this with their
economic system.
Economic System: the way a
country produces, distributes,
and trades its goods or resources

ECONOMICS
Every economic system
must answer 3
questions:
1. What goods and services
will be produced?
2. How will the goods and
services be produced?
3. Who will be able to
consume those goods and
services?

ECONOMICS
The way a society answers
those 3 questions
decides what economic
system they have. There
are 3 different economic
systems:
1. Traditional Economy
2. Command Economy
3. Market Economy

TRADITIONAL ECONOMY
Economic system where
customs and traditional
habits determine what and
how will be produced.
Jobs/responsibilities are passed
down in families or decided
early on
If your father was a
farmeryou would be a
farmer

TRADITIONAL ECONOMY
It is very rare to find
traditional economies today
Agricultural societies
Farming, Hunter-gatherers,
or Cattle herding
Examples: Native American
groups in North and South
America before European
colonization.

COMMAND ECONOMY
Economic system where the government controls what is
produced, how it is produced, and how much is
produced.
The government owns the resources and decides who can get
them
The government also determines wages for workers and the
prices of the goods/products
Workers at a business are told what to produce and how
much to produce
Quota: government imposed limit on how much of something
must be produced (made) or traded (sold)

COMMAND ECONOMY
Command Economies have both good and bad aspects
Cons: it is hard to predict what the country will need or want
Factories may focus on making something the country doesnt
need
Pros: prices are controlled so citizens always know how much it
costs
Healthcare and education are provided at no or little cost
Communism: a political and economic system where the
government owns and controls most things (money and
goods are then distributed)
Cuba the government owns all factories and most farms
Soviet Union

MARKET ECONOMY
Economic system where decisions are
made based on the change in prices or
the demands of both buyers and
sellers
Supply and Demand: concept that an
economy should be based on how much of
something there is available (supply) and
how badly people want the product
(demand)
Prices would go up and down based on
demand

People are free to own their own


businesses and to decide what to
produce, what to charge, and what to
purchase.

MARKET ECONOMY
Market economics have both benefits
and problems
Pros: customers buy what they want and
businesses are not controlled by the
government
Cons: prices can be too high or
businesses frequently go out of business
A Market Economy is also known as
Capitalism, Free Enterprise, or
Laissez-Faire
Capitalism: businesses and trade are
completely controlled by private
businesses (no government control)

MIXED ECONOMY
There are no pure command or market economic systems
today. All modern economies use parts of each and are
called Mixed Economies
However, each Mixed economy will be different from each other
Mixes parts of both command and market economies
In a pure market economy, the government would not be
involved at all.
In mixed economies, the governments make laws to
Protect workers from unfair treatment or low wages
Monopolies (no competition) are prevented by governments
If only one company provides a service, prices go up

Command Economy

Cuba

Venezuela

Market Economy

Brazil

Canada

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