1. Chapter 2.1 notes Types of Economies

2. What is an economy? economy or economic system – organized way of providing for the wants and needs of their people.economy or economic system – organized way of providing for the wants and needs of their people. Economies answer the what, how, for whom questionsEconomies answer the what, how, for whom questions

3. Traditional Economies In a traditional economy, roles and economic decisions are defined by custom.In a traditional economy, roles and economic decisions are defined by custom. Examples: African Mbuti, Aborigines and Inuits.Examples: African Mbuti, Aborigines and Inuits. Advantages – everyone knows which role to play and there is little uncertainty about what, how and for whom to produce.Advantages – everyone knows which role to play and there is little uncertainty about what, how and for whom to produce. Disadvantages – discouragement of new ideas; leads to lower standard of living.Disadvantages – discouragement of new ideas; leads to lower standard of living.

4. Command Economies one in which a central authority makes most of the what, how, and for whom decisions.one in which a central authority makes most of the what, how, and for whom decisions. Examples – N. Korea, Cuba, former Soviet UnionExamples – N. Korea, Cuba, former Soviet Union

5. Market Economies producers and consumers determine what, how and for whom to produce.producers and consumers determine what, how and for whom to produce. examples – U.S., Canada, S. Korea, Singapore, parts of western Europe.examples – U.S., Canada, S. Korea, Singapore, parts of western Europe.