Ch 2

COMPARING ECONOMIC SYSTEMS

Traditional Economies
Roles and economic decisions are
defined by customs.

Ex. of traditional economies

Northern Canadas Inuits

Ex. of traditional
economies

African Mbuti

Traditional Economies
ADVANTAGES

DISADVANTAGE

Everyone knows which

role to play and there is
little uncertainty about
WHAT, HOW, and FOR
WHOM to produce

The discouragement of
new ideas and new ways
of thinking. This leads to
lower standard of living
than in other societies.

Who would like live in a traditional

Economy?
How would your lifestyle be different?

Command Economies
A central authority determines WHAT, HOW,
and FOR WHOM to produce

Ex. communist, socialist, or dictatorship countries

Ex. Of command economies

North Korea
Leader since 2011Kim Jong-un

Bundles of hay
North Korean labor worker making bundles of hay

Ex. Of command economies

Cuba

Leader since 2006, Raul Castro

Modern day Cuba

Ex. Of command economies

The Peoples Republic of China

Leader since 2012, Xi Jinping

Modern day China

Shanghai

Toy makers

Command Economy
ADVANTAGES

DISADVANTAGES

The ability to drastically change

direction in a relatively short period
of time

Consumer needs may not be met

Health and public services are

available at little or no cost
government sponsored

Hard work is not rewarded

The necessary decision-making
bureaucracy delays decisions
Little flexibility to deal with say-to-day
problems
Individual initiative goes unrewarded

Market Economies
Both producers and consumers determine WHAT, HOW, and FOR WHOM to
produce.
The consumers dollar acts like a vote
Producers only ring to market what consumers want to buy

Ex. Of Market Economies

United States

Barack Obama leader since Jan 20, 2009

Modern U.S.

Market Economy
ADVANTAGES

DISADVANTAGES

The ability to adjust to change

The inability to meet every person's

basic needs.

The high degree of individual freedom

The small degree of government intervention

The ability to change the voice of the economy

Variety of good and service created

High degree of consumer satisfaction

Inadequate job of providing some

highly value services such as justice,
education, and health care

High level of personal uncertainty and

the prospect of economic failure