An economic system is how a nation controls and distributes its resources and factors of production. There are three main types: a command economy where the government controls most resources and industries, a market economy where resources are allocated based on supply and demand with limited government involvement, and a mixed economy which combines elements of both command and market economies. Most countries today have mixed economic systems.

1. Economic
System

2. Economic System
It is the way resources (factors of
production) are controlled within a
nation and how they are distributed
among the nation.
How these factors of production are
controlled and distributed defines the
economic system

3. Command vs. Market
Economy
Command Economy
Market Economy
Government is not
Government
involved.
manages all
or most of the Resources
distributed
resources
based on supply
and industries and demand

4. Command Economies
1.Communism
The government owns the
factors of production and
decides how to use the
resources.

5. Command Economies
2. Socialism
The government controls
the critical but
individuals can run noncritical businesses.

6. Market Economy
1. Capitalism
 Government is not
involved;
 The market is the
mechanism of exchange of
goods and services
 Private ownership

7. Advantages/ Disadvantages
Command Economy
• High government
control
• Equal distribution
• No rich no poor
• Communal
ownership
•
•
•
•
Market Economy
No government
control
Unequal
distribution
Increased gap
between the rich
and poor
Private ownership

8. Mixed Economy
A system featuring both
command and market
economies
Most countries in the world
are mixed economy

9. Command Economy
Communism
Market Economy
Capitalism
Socialism
Mixed Economy
Combination of both Command
and Market Economy