Economic Systems
Types of Economic Systems Market economy Based on freedom of companies, people, to make own economic decisions Free market- no government influence on economy
Types of Economic Systems Traditional economies- based on how economy has been run in past Barter system, grow crops for sale, produce own goods for sale
Traditional Economy India
Types of Economic Systems Command economy- gov’t controlled economy Communist
Command Economy- Cuba
Scarcity Lack of a particular resource With lack of resource the price of that good goes up Products made from that good go up Ex. Crude oil makes gas, no oil higher gas prices
Supply and Demand Law of supply Businesses have more product, when they can sell them at high prices Produce fewer products when prices are low
Supply and Demand Law of Demand Buyers will demand more product when good price is low As prices rise, the demand falls As price rises, people do not buy product
Free Enterprise Business owners free to run business with little direction or interference from government Make huge profits Competition from other companies makes good prices
Capitalism Economic system Economy owned by private citizens Invest money Little government intervention
Monopolies One company has complete control over good or service No competition can set price as they see fit Ex. Carnegie Steel 1800’s, Microsoft
US Economic System Has a mixed economy Part market, traditional, command How are we a mix of different economic systems?