1. Types of Economic Systems
Chapter 2
Economics

2. Types of Economic Systems
An economic system is the term used to describe how a nation is organized for production
There are three types of economic systems

3. 1. Traditional Economic System
People make goods for themselves and their families
Their economic roles are the same as that of their parents and grandparents
Societies that produce goods in traditional ways still exist today in parts of South America and Asia

4. Market Economic System
A system where people choose what to buy and sell and competition determines the price
This is also known as capitalism or the free enterprise system
The U.S. strives to have a free enterprise system

5. Command Economic System
The government decides what to produce
This system exists in Cuba today

6. Four Economic Questions
Every type of economic system must answer certain questions
What to produce?
How to produce it?
Who will receive it?
Who owns the means of production in the economic system?
But, each system answers these questions differently

7. Mixed Economy
Nowhere today has an economic system that is truly 100% market or command
Most have elements of each type
For instance the U.S. is mostly a market economy, but does have some government owned businesses and regulations which are elements of a command economy

8. Essay Assignment
List and describe the three types of economic systems. Secondly describe the four questions each economic system must answer. Finally, explain why the United States is not considered a true market economy.