1. 3 Economic Systems
Market Economy
Command Economy
Traditional Economy

2. Market Economy Individuals and businesses make economic decisions.
The market prices that result from individual and business decisions act as signals to producers, telling them what buyers want.

3. Market Economy

4. Market Economy
Adam Smith
“Invisible hand”
Laissez faire”

5. Command Economy
Economic decisions are made largely by an authority such as a feudal lord or government agency.
Planners decide what to produce.

6. Command Economy

7. Command Economy Karl Marx Communist Manifesto
Countries with predominantly command economies:
China, Cuba, North Korea

8. Traditional Economy
Economic Decisions generally repeat those made in earlier times by previous generations.
Continuity is valued in economic life.
Most traditional type of economic activity is bartering.

9. Traditional Economy

10. Mixed Economy

11. Closure
What Makes It A Mixed System?