This document discusses three main types of economic systems - command economies, traditional economies, and market economies - and how they answer the three basic economic questions of what to produce, how to produce, and for whom to produce. Command economies have the government centrally answer these questions. Traditional economies are based on past customs and rituals. Market economies let consumer demand determine production through the mechanism of dollars as votes. Most modern economies are mixed systems that incorporate elements of both command and market structures.

1. Economics Systems

2. All Economic Systems seek to answer the three
basic economic questions...
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1) What to produce?
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2) How to produce?
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3) For whom to produce?

3. Command Economies
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Basic economic questions answered by the
government (central authority)

4. Examples of
Command economies
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Only one command economies left – North Korea
All others have mixed in market economy with their
command structure (China)

5. North Korea

6. How do Command economies answer the
basic economic questions?
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1) What to produce?
Whatever the government
says to produce...
2) How to produce?
However the government tells
you to produce..
3) For whom to produce?
For whomever the government
tells you to produce
(ideally the entire society)
Positives & Negatives??

7. Traditional Economies
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Basic economic
questions answered by
what has been done in
the past
Traditions are
maintained
Ritual, Habit, and
Custom

8. Traditional economies
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Individual roles and
choices are defined by the
customs of elders and
ancestors
These economies are
usually based in societies
of hunter/gatherers
Sharing is a big part of
these economies...

9. How do Traditional economies answer
the three basic questions?
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1) What to produce?
Whatever ritual, habit or
custom dictates
2) How to produce?
However ritual, habit or
custom dictate
3) For whom to produce?
For whomever ritual, habit or
custom dictate
Positives &
Negatives??

10. Market Economies
●
●
Basic economic
questions answered by
consumers
Dollars = Votes

11. How do market economies answer the
three basic questions?
1) What to produce?
Whatever people need
and want..
2) How to produce?
However companies
decide to produce their
product.
(most profitable)
3) For whom to produce?
For whomever wants to
purchase their product..
Positives &
Negatives??

12. Most countries have a mixed economy located on a
continuum between pure market and pure command
Pure
Command
Pure
Market