T R A D I T I O N A L , C O M M A N D , M A R K E T , A N D M I X E D

ECONOMIC SYSTEMS

TRADITIONAL ECONOMY

• Customs and habits of the past are used to decide what and how goods will be produced, distributed, and consumed.• Jobs are handed down from generation to generation- Parent to child. • Very little change occurs over the generations• The system can break down if some people are not there to do their part.• Primitive tools and methods are used (no machinery).• Farming, hunting and gathering, and cattle herding are examples of a traditional economy

COMMAND ECONOMY

• Government planners make the decisions on which goods and services to produce.• Workers are told what to produce and how much

to produce within a period of time (quota).• The wages earned by employees is set by the

government.• The government does NOT always know what

the people need.• People know how much things will cost. • Food, clothing, and housing prices are kept low.• Luxury items like computers and televisions are

priced high.

MARKET ECONOMY

• Known as capitalism and free enterprise• Businesses and farms are owned by individuals

or corporations• The law of supply and demand determines the

price that people pay for items• Supply – the amount of goods available• Demand – how many consumers want the goods• A large supply with low demand = low prices• A small supply with high demand = high prices• Mexico is an example of a market economy

because individuals and corporations own MOST of the businesses and farms

MIXED ECONOMY

•Most countries are MIXED economies.• There are no true command or pure market economies• All economies are actually set on a

pendulum depending on how much the government controls versus how much the people/corporation controls.

COMMAND MARKET