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 WHAT IS ALLOCATION?
The division of things into shares or portions.
In economics, the term refers primarily to the
“allocation of resources,” the process by
which economic resources get allotted
(apportioned, assigned) to their particular
uses for directly or indirectly satisfying
human wants.
WHAT IS AN ECONOMIC SYSTEM?
: the structure of governance composed of
institutions and mechanisms that deal
with activities that answer basic
questions on the needs of an economy.
TYPES OF ECONOMIC SYSTEMS

A. Traditional Economy
: this type of economy answers problems based
on the customs, traditions, beliefs, and norms.

Ex: Primitive societies;

time of “datus” in the Philippines
B. Market Economy
: an economic system in
which economic decisions and the pricing of
goods and services are guided by the interactions
of a country's individual citizens and businesses.
: it answers the WHAT?, HOW?, FOR WHOM to
produce?
1. Feudalism
: an economic and political system that dealt
with extensive land ownership
: basis of man’s power depends on the
ownership of land
: all about the relationship of a landlord and the
vassals
2. Mercantilism
: prevailed in Europe during 16th – 18th century
: the basis of a nation’s power is measured by its
accumulated metal deposits (gold & silver)

Ex: Britain, Netherlands, France, and Spain

3. Capitalism
: an economic system in which the ownership of
factors of production (land, labor, capital, and
entrepreneur) is in the hands of private group or
individuals
: prevailed in Greece, Ancient Egypt, Italy, Babylonia
(Iraq), and Carthage (Tunisia)
Characteristics: ownership of resources & wealth,
decision-making, and pricing
C. Command Economy
: Economic decisions comes from a central
authority and people are expected to abide by
those decisions
1. Communism
: the idea came from Karl Marx
: the goal is to have a classless society
: the state controlled and owned all the industries
and resources
: there is no private property
Advocates: Lenin of Russia, Mao Tze-tung of
China, Ho Chi Minh of Vietnam
2. Socialism
: described as combination of capitalism and
communism
: main industries are controlled by the state
: individuals are allowed to own the small
industries which the state can interfere
: started in France and Great Britain in 1830
: cooperation is more important than
competition
3. Fascism
: established by Mussolini in Italy in 1922
: introduced by Adolf Hitler in Germany
: resources and industries are controlled by the state
under a dictator
: importation of goods is strictly prohibited as well as
strikes and labor unions
“the people are for the state, not the state for the
people”
 SUMMARY
: Economic systems make a way for the government
to answer all the questions, WHAT? HOW?, and
FOR WHOM to produce?
: Economic system is used to allocate resources
: Economic systems answer the three economic
problems
: Wealth of the country is distributed according to
the economic system
INDIVIDUAL TASK
Essay. (15 pts)
- If you had the power and the choice, WHAT
economic system would you establish in the
Philippines? WHY and HOW would you do
it?
(6 – 8 sentences)