Economics 102: Different Economic Systems

Traditional Economy
- Key Characteristics
  - Economic decisions influenced by the customs, traditions, and habits of the group
- Common among tribal peoples
Command Economy
- Key Characteristics
  - Decisions made by the Central government
  - Consumers and businesses have little control
  - Two major types of command economies
    - communism
    - socialism
- Communism
  - Central government owns ALL property
  - Why? For the benfit of the people
  - Controls all aspects of the citizens' lives
  - Few exist today - Cuba, China, North Korea
- Socialism
  - Government owns most basic industries
  - Why? For the good of the society and not for profit
  - Uses any profit for social services (like health and education)
  - Other industries and services follow the capitalist model
    - They are privately owned and consumers decide which products to buy
Market Economy

"Capitalism" involves the private ownership of resources, BOTH basic and non-basic businesses and industries, and the use of prices
"Free Enterprise" is a feature of a market economy in which individuals can start and run their own businesses

Mixed Economy
- A "mixed economy" is a mixture of command and market types
- Almost all economies are "mixed" economies