Traditional Economies

• Found in rural, developing nations• Customs govern the economic decisions• Technology is not readily available• Farming, hunting, and gathering are the main

activities• Life is similar to what has happened for

generations• Economic activities centered on survival

• What is produced and what an individual does is based on birth• Examples of Traditional Economies

are Burkina Faso, Bolivia, Botswana• Government intervention is scarce• Economic decisions are made based

on tradition

Command Economies

• Central authority makes decisions and decides how resources shall be used.

• There is little individual freedom• There is no competition• Businesses are not run to create a profit• Consumers have few choices in the market

place• Factories must meet quotas

• Shortages are common• Idea is that collectively you are stronger• Public ownership of property• Central planning (targeted production

levels.• Government decides what your

occupation shall be.

• Government sets the prices of goods and services

• Examples of command economies are Cuba, North Korea, and the People’s Republic of China

Market Economies

• Resources are privately owned• Economic decisions are made by individuals

that are competing to make profits• Individual freedom is very important• Economic decisions are made by the principals

of supply and demand• Profit is the motive for increasing work

• Sometimes referred to as capitalism.• Economic freedom• Competition among businesses for

customers• Individuals can keep profit• Competition determines price and

increases the quality of a product

Mixed Economy

• Government and individuals share the decision making process

• Government guides and regulates production of goods and services offered

• Individuals own means of production• Government protects workers from unfair policies• Most effective economy for providing goods and

services• US & most Western European countries.