It gives information about the CHARACTERISTICS OF DIFFERENT ECONOMIC SYSTEMS

1. AEC101
PRINCIPLES OF AGRICULTURAL
ECONOMICS(1+1)

2. CHARACTERISTICS OF DIFFERENT
ECONOMIC SYSTEMS

3. ECONOMIC SYSTEM:
 An economic system is a production and
exchange of goods and services as well as
allocation of resources in a society.
It includes the combination of the various
institutions, agencies, entities and consumers
that comprise the economic structure of a given
community.

4. CENTRAL ECONOMIC PROBLEMS
 What goods/services will be produced?
 How will goods/services be produced?
 Who will consume the good/services?
The way how the country answers these
questions determines its economic system.

5. TYPES OF ECONOMIC SYSTEM
 Traditional Economy
 Command Economy(socialism)
 Market Economy(capitalism)
 Mixed Economy

6. 1.TRADITIONAL ECONOMIC
SYSTEM
 A traditional economic system is the best place
to start because it is, quite literally, the most
traditional and ancient type of economy in the
world.
 Traditional economies would never, ever, in a
million years see the type of profit or surplus
that results from a market or mixed economy.

7. 2.COMMAND ECONOMIC
SYSTEM
 In terms of economic advancement, the
command economic system is the next step up
from a traditional economy.
 The most notable feature of a command
economy is that a large part of the economic
system is controlled by a centralized power;
often, a federal government

8. 3.MARKET ECONOMIC
SYSTEM
 A market economy is very similar to a free
market. The government does not control vital
resources, valuable goods or any other major
segment of the economy.
 In this way, organizations run by the people
determine how the economy runs, how supply is
generated, what demands are necessary, etc.

9. 4.MIXED ECONOMIC
SYSTEM
 A mixed economic system (also known as a
Dual Economy) is just like it sounds (a
combination of economic systems), but it
primarily refers to a mixture of a market and
command economy.

10. CHARACTERISTICS:
TRADITIONAL ECONOMIC SYSTEM:
1. Goes by religious beliefs and history.
2. Do not change a lot
3. Basic technologies
4. Use minimum technologies
5. Barter/Trade
6. Everyone has a certain role
7. People only use/supply what they need most of the time
8. Large relation to poverty
9. Under developed

11. COMMAND ECONOMIC SYSTEM
The government or other central authority makes
decisions and determines how resources will be
used.
Change can occur relatively easily.
There is little individual freedom.
There is no competition.
Businesses are not run to create a profit.
Consumers have few chooses in the market
place.
Factories are concerned with quotas.

12. MARKET ECONOMIC SYSTEM
Resources are owned and controlled by
individuals.
Economic decisions are made by individuals
competing to earn profits.
Individual freedom is considered very important.
Economic decisions are made by the basic
principles of supply and demand.
Profit is the motive for increasing work rather
than quotas.

13. MIXED ECONOMIC SYSTEM
Government and individuals share the decision
making process.
Government guides and regulates production of
goods and services offered.
Individuals own means of production.
Protects consumers and workers from unfair
policies.
Most effective economy for providing goods and
services.

14. COMPARISON OF THREE
ECONOMIC SYSTEMS
CHARACTERS SOCIALISM CAPITALISM MIXED ECONOMY
Ownership and
control
Government
owns the means
of production
Business/Indivi-
duals control
means of
production
Business owns most
resources and
determine what and
how to produce but the
government regulates
certain industries
Karl Marx
(Father of
Socialism)
Adam Smith
(Emphasized
Capitalism)
J.M.Keyens(Emphasize
d the importance of
Mixed Economy)

15. CHARACTERS SOCIALISM CAPITALISM MIXED
ECONOMY
Standard of
living
Goal is equal for
everybody,enforced
by the government
High standard of
living and
economic security
High standard of
living and
economic
security
Who decides
what to
produce?
Government makes
all economic
decisions
Business base
decisions on
supply and demand
and free
enterprise(PRICE)
Business
decisions and
some degree of
government
control
Who decides
how to
produce?
Government Business Business but
govt. regulates

16. CHARACTERS SOCIALISM CAPITALISM MIXED
ECONOMY
To whom the
goods and services
are produced?
Whoever the
government
decides to give, we
have to give
To the consumers To the consumers
Advantages Greater economic
welfare
No fluctuations in
business cycle
Less interference
of government
Efficient allocation
of resources
Advantages of free
initiative and
enterprise
Rapid economic
development
Examples Cuba, North
Korea, Former
Soviet Union
Australia’s
Economy
Brazil, Mexico,
Canda, UK, US