THE FOUR ECONOMIC SYSTEMS

Economic SystemsAn economic system describes how a country’s economy is organized.

It is a system of production, distribution and consumption.

Economic systems influences the way the nation make economic choices about how the nation will use its resources.

The four economic systemMarket EconomyCommand EconomyTraditional EconomyMixed Economy

The Market EconomyIndividuals control production and allocation

decisions through demand and supply.This economy is guided by the changes of

prices that occur as the individual buyers and sellers interact in the market place.

The Command EconomyThe government makes all the decisions and

owns most of the production.The government runs all the businesses,

controls all employment, and decides how goods and services will be produced.

The governmental planning determines the prices of goods and services or the wages of workers

The traditional EconomyThis economy is shaped by religion and

customsIn this economy people will always make

what they always made and they will do work that they parents did.

The Mixed EconomyIt is an economy with both characteristics of

command and market economy.The government owns and operates only

selected major sources of production.Businesses own most resources and

determine what and how to produce, but the government regulates certain industries.

Which economy is often used?1. Market Economy: more individual economy

DEMAND

OUTPUT MARKETSGoods

Services

INPUT MARKETS

LaborCapital

EntrepreneursPhysical Resources

Information

HOUSEHOLDS

• Demand products in output markets

• Supply resources in input markets

FIRMS

• Supply products in output markets

• Demand resources in input markets

DEMAND

SUPPLY

SUPPLY

BIBLIOGRAPHY

Brooke, K. (05/09/2007). Understanding Economic Systems.

Coil, B. (18/12/2008). Economic systems.David. (17/10/2009). The Economic Systems.Stevenish. (08/08/2010). Different types of

economic system.Yacub. (10/02/2012). Types of economic

systems.