Economic System Types

by Dana Griffin, studioD

The worlds economic systems fall into one of four main

categories: traditional economy, market economy, command
economy and mixed economy; however, there are unlimited
variations of each type. An economic system must define what to
produce, how to produce it and for whom to produced it.
Depending on the products produced and the environment, certain
economic strategies will be more successful than others.
Ads by Google
Economic systems driven by supply and
demand are called market economies.

Start Download - View PDF

Related Articles

Convert From Doc to PDF, PDF to Doc Simply With The Free On-line
App! www.fromdoctopdf.com

Features of the Market Economic

System

Traditional

Pros & Cons of Market Economies

Difference Between Industry & Market
Analysis
Differences Between Classical &
Keynesian Economics
Free Enterprise Vs. Command
Economy

A traditional economic system is one in which each new

generation retains the economic position of its parents and
grandparents. Traditional economies rely on the historic success
of social customs. South America, Asia and Africa support some
traditional economies of thriving agricultural villages. Tradition
decides what an individual does for his living, so industry, clothing
and shelter are the same as in previous generations.

Market

Market economies are based on consumers and their buying

decisions rather than under government control. Market trends
and product popularity generate what businesses produce. The producers choose how to make products
based on the most economically sound decision: that might mean machine labor to save costs or human
labor for specific skills. The buyers decide who gets which products by what they are willing to pay for what
they want. Complete market economies do not utilize price controls or subsidies and prefer less regulation of
industry and production. Market decisions rely on supply and demand for pricing. Governments role is to
create a stable economy for the market to operate properly. The market system relies on many factors to
ensure its success. The profit motive or incentive for a financial reward for enterprise stimulates production.
Information regarding available products and services needs to be available to producers and consumers.
Producers use the information to set accurate prices and procure supplies at the lowest cost. Price relates
directly to the costs and benefits of product creation and use and required profit.

Command

In a command economy, the government controls all economic activity. One example of a command economy
is communism. In a government-directed economy, the market plays little to no role in production decisions.
Command economies are less flexible than market economies and react slower to changes in consumer
purchasing patterns and fluctuations in supply and demand.

Mixed
A mixed economy combines qualities of market and command systems into one. In many countries where
neither the government nor the business entities can maintain the economy alone, both sectors are integral
to economic success. Certain resources are allocated through the market and others through the state.
Theoretically, this system should be able to combine the best policies of both systems, but in practice the
proportion government controls and response to market forces varies. Some countries rely more on market
emphasis and others on state planning.
Ads by Google

ACCA Online Courses

Study ACCA + MBA/MA Online.
Save up to 30% Study Time. Apply!
studyinteractive.org / ACCA-Online

Increase your Income

Benefit from currency moves
Receive a unique PDF, demo account
www.iforex.com

Kerja Sambilan Untuk Wang

RM20 Setiap Survey - Ambil Bahagian
Survey Berbayar Online. Daftar Sini
tinjauanbandingan.net / KerjaSambilan

You May Like

How Malaysians Can Travel Luxurious on a Budget
Secret Escapes

SponsoredLinks byTaboola