Types of Economy

Command

Market

Mixed

Traditional

Command economy

• Ex: mainly communistic countries have this, Cuba, Saudi Arabia • Government totally involved • Government tell you what to produce

…how much to produce

…where to produce

…who can buy and how much to charge

etc…point being you are not the owner

Benefits and drawback• you’re limited • you help the government the government will help you.

– Elements of the Command Economy

• Cooperation - Working toward a common goal, in theory the job is adapted to fit the needs of the worker. You'll love your job more.

• Collectivization. The idea is that collectively you are stonger. By collecting your talents together in a cooperative effort you will accomplish more.

• Collective farms - Much like the Hutterite model, a Collective farm in a command economy shares the talents of all on the collective to reach "Common" goals which have been delivered either in cooperation or by the direction of someone above.

• Public ownership of Property - State ownership of all property allows for control of resources including human labor. Central ownership will (they believe) maximize the collective good use of that land. Where private ownership is allowed it is restricted and secondary to the common land.

• Equality - all members should have the same opportunity to share in the wealth and produce of the land. Everyone has the same right to a defined "minimum" standard of living. Different Command economies have managed to attain different levels of "minimum"

• Central Planning - A group of economic "experts" study the economy and recommend production needs and targets to the governing body. Production and supposedly consumption are to planned for far into the future. Certain sectors of the economy can be allowed to suffer in order that a nation may make "planned" advance in other areas. Stalin's commitment to "Heavy Industry" at the expense of food is one example.

• Five Year Plans - Most, if not all, Communist Governments have maintained five year plans. This include targeted production levels and directions for the advancement of industry. The targets can come under severe attack if not attained. This is less of a problem in a dictatorship or totalitarian government capable of "fixing" the reports.

• http://www.gppsd.ab.ca/gpcomp/academ/soc/33/Command.html

Mixed economy

• Ex. North Korea • government have complete control but,• Firms are own privately and freely• same like command economy, you help the economy the government

helps you. There’s a bondage between both. • Increase in production and efficiency

Traditional economy

· Traditional economies are found in rural, non-developed countries

· Some parts of Asia, Africa, South America and the Middle East have traditional economies

· Customs govern the economic decisions that are made

· Technology is not used in traditional economies

· Farming, hunting and gathering are done the same way as the generation before

· Economic activities are usually centered toward the family or ethnic unit

· Men and women are given different economic roles and tasks

• http://www.curriculumlink.org/econ/materials/traditional.html

Market economy

• Ex:us and most Democracy nations in the Americas• Firms compete for the peoples business• Government rather not be involved

benefits and drawbacks• higher wages or living well• not limited • but, higher property tax • to much of foreign goods

Market economy Vocabulary Perfect competition – A form of market organization in which a great

many small firms produce homogeneous products.

Monopoly – A form of organization in which there is only one seller of a product. Industry that are to hard to get in and

Oligopoly – A form of market organization in which there are relatively few firms. The industry is not that interesting so not a lot of people go in

it.

Negative Externalities – Is what you get when you piss some on off. when costs or benefits arise from economic activity

and fall on a third party.

Positive externalities – opposite of negative externalities you give good and you will receive good.

Homogeneous products: a good or service that varies little from producer to producer

Natural monopoly: a situation in which it is not practical to have competition.

Monopolistic competition: A market organization in which many firms produce

Marginal private benefit (MPB): the added benefit that individual directly involved in an activity get from increasing the activity by one unit.

Five characteristic

• 1. Number of firms - different businesses selling the same product.

#’s Stores that sell the same product • 2. Types of product sold - different companies produce the same products.

Stores must have products to sell

3. Ease of entering or leaving the industry –the lost of leaving the industry or entering

If you’re leaving an industry like, Newspaper your machinery is not wanted so you selling that machinery will cost you, If you’re a farmer the machinery is

wanted and can be use for several things.

• 4. Amount of information known about the market – knowing the kind of industry you are getting into

You must be an “expert” of your product. You must know if it’ hot or not.

• 5. Degree of price control – How The price of the product is determine.

Content

• What’s your current issue? C.type of market.-->Market economy • Who are the key players? The people of the economy are the suppliers and consumers of

how the economic system works • who does it affect in our society? The people of the world. For example if you are

importing to many good you are shutting down your competition. And in a market you need competing to work

• how dodoes your topic fit into the US economy ? It’s the type of economy the us have.• Where does it fit in the circular flow chart? It is the flow chart • how does the government affect your issue? The US government set limits to how much

you can import and export you the good of the nation. But other countries that have a different type of economy the government is in charge and you are the slave.

Questions