FULL NAME: BRIAN WILLIE BRIAN WILLIE

Economic Assignment 1 Term Two (2) Total Marks 25marks

Topic: Economic Systems

Sub-Topic: Types of Economic Systems

There are Four Types of Economic Systems

1. Traditional/Barter Economics
2. Command / Planned Economics
3. Market / Capital Economics
4. Mixed Economics

Question One (1)

Identify and State Two (2) Features of each four economics systems

 Traditional / Barter Economics System Features

1. One of the key features of a traditional economy is that it is based on subsistence

agriculture, fishing, hunting, and gathering. In other words, people produce only
what they need to survive, and there is little surplus.
2. A traditional economy is usually based on barter and trade, where people exchange
goods and services with each other rather than using money.
3. Another feature of a traditional economy is that it is typically based on social roles
and customs, where each member of the community has a specific role to play in the
economy. Examples of social roles include hunters, farmers, and craftsmen.

 Command / Planned Economics System Features

1. The government has absolute power over all the resources available in this
economy. From raw material to finished products, the government has complete
command over the resources.
2. People in authority like politicians and bureaucrats give orders to all the stakes
involved in the market such as buyers, sellers and investors.
3. People in authority like politicians and bureaucrats give orders to all the stakes
involved in the market such as buyers, sellers and investors.
4. The government controls the pricing mechanism and regulates the price of goods
and services.
 Market / Capitalist Economy System Features
1. Freedom: Market participants are free to manufacture, sell, and buy anything they
choose, subject to government laws.
2. Freedom: Market participants are free to manufacture, sell, and buy anything they
choose, subject to government laws.
3. Freedom: Market participants are free to manufacture, sell, and buy anything they
choose, subject to government laws.
FULL NAME: BRIAN WILLIE BRIAN WILLIE

 Mixed Economics System Features

1. Freedom and Control: Here all individuals have the freedom to produce goods and products,
hold property, choose their occupation and choose or demand products/services they want.
But to keep a check on monopolistic practices and discrimination of the lower sectors of
society the state maintains some control.
2. Cooperative Sector: In a mixed economy another sector exists, the cooperative sector. The
main aim of the formation of this sector is so that the government can provide financial
assistance to cooperative societies involved in warehousing, agricultural, dairy industry, etc.
3. Economic Planning: In a mixed economy we have a central planning authority. All sectors of
the economy follow the economic plan of the state to achieve various targets and goals. The
plan is not rigid but more of a general guideline for economic growth and prosperity of the
nation.

QUESTION TWO (2)

List Two Advantages and Disadvantages of each of Four Economics Systems

 Tradition / Barter Economics Systems

 Advantages
1. Traditional economies work with the natural environment: In the traditional economy, the
goods and services that are produced are based on what is available in a specific geographic
area. It creates a self-sustaining economy where the focus is to meet basic needs through
what can be obtained by the natural environment. Instead of drilling or digging a well, the
traditional economy might take water from a mountain stream.
2. Economic Planning: In a mixed economy we have a central planning authority. All sectors of
the economy follow the economic plan of the state to achieve various targets and goals. The
plan is not rigid but more of a general guideline for economic growth and prosperity of the
nation.
3. Economic Planning: In a mixed economy we have a central planning authority. All sectors of
the economy follow the economic plan of the state to achieve various targets and goals. The
plan is not rigid but more of a general guideline for economic growth and prosperity of the
nation.
 Disadvantages
1. Economic Planning: In a mixed economy we have a central planning authority. All sectors of
the economy follow the economic plan of the state to achieve various targets and goals. The
plan is not rigid but more of a general guideline for economic growth and prosperity of the
nation.
2. It offers few choices: What the modern world thinks of advancement opportunities doesn’t
exist within the traditional economy. If your father is a farmer in a traditional economy, then
the expectation is that you will learn from your father and become a farmer one day too.
Then your children will also be farmers. That means there are few choices within this
economy structure to dream bigger. Change of any type tends to be strongly resisted
because change threatens survival.
3. There may be a lower overall quality of life: Modern amenities are not always present within
a traditional economy. There may be a lack of medical care available to the economy.
Sanitation technologies may not be available. This creates a circumstance where an
individual in the traditional economy may have their life or livelihood threatened when an
FULL NAME: BRIAN WILLIE BRIAN WILLIE

individual in a larger, modernized economy can receive a needed treatment and continue
with their day.
 Command / Planned Economics System
 Advantages
1. Operations are consistent within a command economy: Within the structure of a command
economy, the businesses which do function are operating at the behest of the government.
Their structures are dictated by the government, so there is consistency within the
operational structures of each business. Instead of attempting a market takeover or trying to
dominate a market share, the businesses work to produce the goods the society needs to
function.
2. It creates a flexible industrial sector: Industries are directly operated or controlled by the
government in a command economy, so their resources can be applied to whatever project
needs to be completed. This creates a flexibility within the industrial sector that other
economy formats cannot match. If there is a massive project that needs to be completed,
the government can quickly transfer the resources that are necessary to get the job finished.
3. The exact demands of a society can be met: Within the structure of a command economy,
the government seeks to maximize its efficiency. To do this, it will attempt to meet the exact
demands that people have. By limiting over-production of items, there is less waste that
occurs within the society. This creates more resources for the government to use in other
areas. This may limit personal choice, but it also reduces the chances of a shortage occurring
when production rates are based on accurate resources.
 Disadvantages
1. It eliminates the competition: Within a command economy, the government owns and
controls everything. Competition is discouraged, if it is even allowed. Any private business
would constantly be under the threat of a government takeover of their operations and have
no options to recover their assets should that occur.
2. It encourages illegal activities: Within a command economy, people cannot always get what
they need to meet the basic needs of living. To get these items, an underground market
flourishes so that goods or services that are needed can be received outside of government
control. This is the only way that outside goods, which may be better than domestic goods,
can be received by a population in this type of economy.
3. It reduces exports: The lack of communication doesn’t stop at the local population level.
Governments operating a command economy struggle to speak with neighboring nations as
well. This limits the export opportunities because there is no knowledge about what those
other nations need.
FULL NAME: BRIAN WILLIE BRIAN WILLIE

 Market / Capitalist Economics System

 Advantages
1. Since it follows the basic principle of economics which is price determination through supply
and demand without any external intervention, it is the most simplistic economic system
among all other economic systems.
2. Since it follows the basic principle of economics which is price determination through supply
and demand without any external intervention, it is the most simplistic economic system
among all other economic systems.
3. Since it follows the basic principle of economics which is price determination through supply
and demand without any external intervention, it is the most simplistic economic system
among all other economic systems.
 Disadvantages
1. It leads to huge gap between rich and poor as rich keeping earning money and since
government does not intervene there is no way poor can bridge that gap which is the reason
why one seldom finds out a completely free market economy.
2. Since it follows the basic principle of economics which is price determination through supply
and demand without any external intervention, it is the most simplistic economic system
among all other economic systems.
3. Since it follows the basic principle of economics which is price determination through supply
and demand without any external intervention, it is the most simplistic economic system
among all other economic systems.
 Mixed Economic System
 Advantages
1. It provides capital through the promotion of innovation: Mixed economies promote the
value of organizations which are the most efficient. The only way to reach this status is to
invest in research and development. Innovation is highly prized in this economy type
because its consumers demand the best at all times. When an organization solves pain
points for their customer, the additional capital they receive gets reinvested into the overall
society to solve more issues.
2. It permits spending in systems that a pure capitalist economy would neglect: Mixed
economies allow for private ownership because the view is that the state is less capable of
creating profits than the individual. At the same time, however, the government also
recognizes that there is a duty to the infrastructure, social needs, and financial safety nets
required for a society to survive. Pure capitalism would not offer food stamps,
unemployment, or even highway building because each person or company would serve
their needs first at all times.
3. It improves production levels and overall efficiency rates: Mixed economies encourage
competition at all levels. They encourage disruptors of any size to enter their industry
because that inspires more innovation. Consumers will always shop for the best possible
product to meet their needs, even if that means being disloyal to brands they’ve used for
years.
FULL NAME: BRIAN WILLIE BRIAN WILLIE

 Disadvantages
1. It triggers poverty if managed incorrectly: The mixed economy works when all three entities
provide checks and balances for one another. If one element receives a greater share of the
pie, then someone else receives less of it. The imbalance continues unless specific
corrections are made to restore its balance.
2. It offers higher tax rates than other economy types: The mixed economy offers numerous
benefits, but it also offers high tax rates. Governments are funded through taxation and the
revenues (if any) earned from their private or chartered companies. Individuals and
corporations are taxed at various, often progressive levels based on the amount of income
received.
3. It creates higher levels of debt: Governments require funding, just as corporations and
individuals need income to exist. If the state becomes involved with specific enterprises
through subsidies or backing, then the presence of a de facto monopoly occurs, even if the
legal definition is not met.
FULL NAME: BRIAN WILLIE BRIAN WILLIE

COVER PAGE
Economic assignment no.1

Term 2 total marks 25

Given; brian surname; willie
Class: 11gee
School: gerehu secondary school
Year; 2023