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Types of Economies

Types of Economies. The Three Key Economic Questions. Economics 101. An economic system describes how goods and services move among citizens. They are the rules under which everything works together. We’ll look at the four basic economic types

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Types of Economies

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  1. Types of Economies The Three Key Economic Questions

  2. Economics 101 • An economic system describes how goods and services move among citizens. They are the rules under which everything works together. • We’ll look at the four basic economic types • There are three basic questions that an economy tries to answer • No system is without flaws and all have benefits

  3. The Three Questions • Consider the economic purposes for why we gather together into a society. What are some fundamental goals? • “What to produce?” What are our needs and which goods and services will meet them. • “How to produce it?” What methods and controls will be in place to produce what we need? • Who will consume it? How is each item obtained by the end user and who is that?

  4. Economic Life Cycle

  5. Types of Economies Market Economy - An economic system in which individuals own and operate different all aspects of production. Supply and demand rule. a.k.a. free enterprise or capitalism Command Economy - An economic system in which government owns and operates all aspects of production. It determines supply. E.g: socialism & communism Traditional Economy - An economic system based on culture and tradition. Economy is based on agriculture and hunting. E.g: non-industrialized agrarian societies.

  6. Mixed Market Economies Mixed Economy - An economic system where both command and market systems are present. Many countries possess a form of this system; some more free market (U.S.), some more command (China), some in between (Canada)

  7. Mixed Market Economies Canada China

  8. A Cynical View • This very cynical/perverse drawing describes the extreme views

  9. Public vs. Private • Mixed market economies are a blend of two primary ways of delivering goods and services • The private sector looks for an opportunity to supply, for profit, an unmet demand • The government may control access to some valuable resources or draw some monies from the private sector to fund common goods • Newspaper activity

  10. Inquiry Questions • What are the dangers of a single (undiversified)economy ? • What is the difference between a producer and a consumer in a mixed market economy? • What is the role of the producer and consumer ? • Is there a need for government regulation in a mixed market economy? Or should free enterprise – supply and demand?

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