Command Economies. III. Market ... traditional economies, command economies, ... The system in which individuals in a market economy are free to under...
What Is an Economy? Section 3: Three Types of Economies Traditional Economies • Traditional Economy —
Economy where the basic economic decisions are made according to longestablished patterns of behavior that are unlikely to change. •
—
Economic customs, rituals, roles, or values
In this form of economy, tradition dictates what to produce, how to produce it, who gets what is produced, and who owns the resources.
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What Is an Economy? Section 3: Three Types of Economies
Command Economies • Command Economy — —
An economic system in which the government or a central authority figure owns or controls the factors of production and makes the basic economic decisions. Government Decision Making •
A central planning group makes the decisions of what is produces, how to produce it, and how gets the products.
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What Is an Economy? Section 3: Three Types of Economies Market Economies • Market Economy — —
A system in which individuals own the factors of production and are free to make their own choices about production, distribution, and consumption. The United States economy is based on the market system. • •
Decision making done by individuals There is competition
• The Incentive of Profit Seeking — —
Profit: the difference between the total cost of production and the total revenues Investment: the use of money to help a business get started, with the hope that the business will earn a profit in which you can share
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What Is an Economy? Section 3: Three Types of Economies Market Economies (continued) • Free Enterprise —
The system in which individuals in a market economy are free to undertake economic activities with little or no control by the government.
• Capitalism —
A system in which people make their own decisions about how to save resources as capital and how to use their capital to produce goods and provide services.
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What Is an Economy? Section 3: Three Types of Economies
Modern Day Economies • Mixed Economy —
An economy that is a mixture of the three basic systems
• China —
Command economy, with elements of free enterprise
• The Economy of the United States — —
Market or “free enterprise” economy Small elements of government control
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What Is an Economy?: Section 3 Section Reading Support Transparency
