1. Economic Systems

2. Every economic system answers these three questions:
Remember!
Every economic system answers these three questions:
What to produce?
How to produce it?
How, and to whom, will it be distributed?

3. 3 BASIC TYPES OF ECONOMIC SYSTEMS
MARKET ECONOMY
COMMAND ECONOMY
TRADITION BASED ECONOMY

4. MARKET ECONOMY
People determine what to produce, how to produce it, and how to distribute the goods.

5. COMMAND ECONOMY
Government determines what you will produce, how you will produce it, and how you will distribute the goods.

6. TRADITION-BASED ECONOMY
Cultural groups determine what you produce, how you will produce it, and how you will distribute the goods.

7. MIXED ECONOMIC SYSTEM
This is a combination of all three economic systems.
Most societies have this type of system

8. PROS AND CONS

9. MARKET ECONOMY PROS Freedom to choose CONS
Bad choices could result in lost money

10. COMMAND ECONOMY PROS Secure pay and job CONS
Lack of creativity, motivation, and autonomy
Lack of resources

11. TRADITION-BASED ECONOMY
PROS
Pride in work and one’s heritage
CONS
No freedom to choose
Family / social pressure to continue traditions.