1. Types of Economies

2. Traditional Economy In a traditional economy, roles and decisions are decided upon by custom Each person plays a specific role Some examples are: the Australian Aborigines, and northern Canada’s Inuits

4. Traditional Economy Advantages: everyone knows which role to play and there is little uncertainty about WHAT, HOW, and for WHOM to produce. Disadvantage: is the discouragement of new ideas and new ways of thinking. This leads to a lower standard of living than in other societies.

5. Question: How would your life be different if you were living in a traditional economy?How would your life be different if you were living in a traditional economy

6. Command Economy In the command economy, a central authority (the government) determines WHAT, HOW, and FOR WHOM to produce Command economies include: North Korea, Cuba, the former Soviet Union and the People’s Republic of China.

8. Command Economy Advantages: – The ability to drastically change direction in a relatively short period of time. –Many basic health and public services are available at little or no cost

9. Command Economy Disadvantages: –Consumer needs may not be met –Hard work is not rewarded –The necessary decision-making bureaucracy delays decisions –Little flexibility to deal with day-to-day problems –Individual initiative goes unrewarded

10. Market Economy In a market economy, producers and consumers determine WHAT, HOW and FOR WHOM to produce. In each market transaction, the consumers dollar acts like a “vote” making sure that producers continue to provide the goods and services that consumers want to buy.

11. Market Economy Examples of countries with a market economy: Japan, Canada, the United States, South Korea, Singapore and parts of Western Europe.

13. Market Economy Advantages: –Ability to adjust to change –Individual freedom –Minimum amount of government involvement in economy –Ability to have a voice in economy –Variety of goods and services provided –Great consumer satisfaction

14. Market Economy Disadvantages: –Inability to meet every person’s basic needs –Inadequate job of providing some highly valued services such as justice, education and health care –High level of personal uncertainty –Sometimes economic failure

15. Question: Which economy do you believe is best and why?Which economy do you believe is best and why?