ECONOMIC SYSTEMS

1. They have an economic system or an organized way of providing for the wants and needs of their people

2. The survival of any society depends on its ability to provide food, clothing and shelter for its people

3. economic system IS an organized way of providing for the wants and needs of their people

4. Since these societies are also faced with scarcity decisions concerning What, How and for Whom to produce must be made.

5. The way in which these decisions are made will determine the type of economic system they have.

6. There are three major kinds of economic systems: traditional, command and market.

7. In a society with a traditional economy nearly all economic activity is the result of ritual and custom

8. The main advantage of the traditional economy is that everyone has a role in it The main disadvantage of the traditional economy is that it tends to discourage³new ideas and even punishes people for breaking rules or doing things differently.

9. a command economy — one where a central authority makes most of the What, How and for Whom decisions

10.The major advantage of a command system is that it can change direction drastically in a relatively short time

11.The major disadvantage of the command system is that it does not always meet the wants and needs of individuals

12.In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions¹.

13.in a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests

14.the main incentive of a market economy is the fact that Since consumers like products with low prices and high quality, producers in a market economy will try to supply such products

15.First advantage is that a market economy is flexible and can adjust to change over time. The second major advantage of the market economy is the freedom that exists for everyone involved. The third advantage of the market economy is the lack of significant government intervention.

Date: 2014-12-21; view: 1263