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.
Economies answer the what, how, for whom questions

3. Traditional Economies
In a traditional economy, roles and economic decisions are defined by custom.
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.
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.
Examples – N. Korea, Cuba, former Soviet Union

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