Chapter 2.1 notes

1
Chapter 2.1 notes

• Types of Economies

2
What is an economy?

• economy or economic system organized way of
  providing for the wants and needs of their
  people.
• Economies answer the what, how, for whom questions

3
Traditional Economies

• In a traditional economy, roles and economic
  decisions are defined by custom.
• Examples African Mbuti, Aborigines and Inuits.
• Advantages everyone knows which role to play
  and there is little uncertainty about what, how
  and for whom to produce.
• Disadvantages discouragement of new ideas
  leads to lower standard of living.

4
Command Economies

• one in which a central authority makes most of
  the what, how, and for whom decisions.
• Examples N. Korea, Cuba, former Soviet Union

5
Market Economies

• producers and consumers determine what, how and
  for whom to produce.
• examples U.S., Canada, S. Korea, Singapore,
  parts of western Europe.