REPORTER:

CEDRON, SHIELA G.

ECONOMIC SYSTEMS

ECONOMIC SYSTEMS

Economic system is a system adopted by a society that organizes the production, distribution and consumption of goods and services.

ECONOMIC SYSTEMS

An economic system is a set of economic institutions that dominates a given economy.

What is the principal objective of an economic system?

to solve the basic economic problems

What?.

How?.

Who/m?.

Basic economic questions

4 Main types of Economic System :

• Traditional Economic System

• Market Economy• Command Economy• Mixed Economy

TRADITIONAL ECONOMY SYSTEM

• Economic decisions are made based on customs and traditions.

agrarian community

agrarian community

Characteristics:

• It is based on agriculture, fishing, hunting, gathering or combination.

• It is guided by traditions• It may use barter instead

of money

Advantage:

• Traditional economies are usually less destructive to the environment, and are therefore sustainable.

Disadvantage:

• Very vulnerable to changes in nature, especially the weather.

• They are more vulnerable to market or command economies that have superior resources to wage or take away needed natural resources.

MARKET ECONOMY

• Economic decisions are made by the market system or simply the demand and supply condition.

Characteristics:

• Private property• Freedom of choices• Motive of self-interest• Competition• System of markets and

prices

Advantage:

• It ensures the most desired goods and services are produced

• Good and services are produced in the most efficient way possible.

Advantage:

• Innovation is rewarded.

• The businesses and individuals who are most efficient and innovative will accumulate more capital.

Disadvantage:

• A market economy functions through competition.

• Rewards those who are good at being competitive.

COMMAND ECONOMY

• Economic decisions are made by the government.

Characteristics:

• The government creates a central economic plan for all sectors and regions of the country.

• The government allocates all resources according to the central plan.

Characteristics:• The central plan sets the

priorities for production of all goods and services.

• The government owns a monopoly business in industries deemed important to the goals of the economy.

Characteristics:

• The government creates the laws that regulate economic activity.

Advantage:

• Centrally planned economies are great at mobilizing economic resources quickly, effectively and on a large scale.

Advantage:

• Command economies are also good at wholly transforming societies to conform to the planner's vision

Disadvantage:

• Command economies mow down other societal needs.

• Command economies often produce too much of one thing and not enough of another.

Disadvantage:

• Command economies are not good at stimulating innovation.

• Centrally planned economies also have trouble producing the right exports at global market prices.

MIXED ECONOMY

• A mixed economy seeks to have all the advantages of a market, command and traditional economy with little of the disadvantages.

Characteristics:

• Most allow government to have a command role in areas that safeguard the people and the market itself.

• Most mixed economies follow traditions that have been so ingrained that they may not even be aware of it.

Characteristics:

• The global economy is primarily free-market based. There is very little government control, although some regulations and agreements have been put into place.

Bibliography:

• Camba, Aileen L., Maniego, Norie L., Ronan, Jose R., Payumo, Casiana Salud., “Understanding Economics”

• Gabay, Bon Kristoffer G., Remotin, Roberto M. Jr., Uy, Edgar Allan M., “Economics: Its Concepts & Principles (with Agrarian Reform & Taxation)” 2007

• Tullao, Tereso S. Jr., “Understanding Economics in the Philippine Setting”, Phoenix Publishing House 2002

next is…….“Economic Goals”“Economic Goals”