Economic+Systems+-+Market,+Command+and+Traditional

Economic Systems- Market, Command, and Traditional

The economic systems throughout the world are market, command, and traditional. All eoconomic systems are based off of the production, distribution, and consumption of goods and services within a particular society. Within a market system (capitalism), the resources are owned by the people, households and are sold to the businesses for an income through the factor market. This income is used by households to buy products from the businesses through the product market. The complexity of this market can be viewed below in the diagram of the circular flow model. Within this system the government has very little control over the economy. This is refered to as lassiez-faire (let it be) economics, or a free market that the government does not have much influence over the businesses. So, the business choose what they are going to produce and how much they are going to sell it for.

The command system, unlike the market system, is dominated by the government, and therefore households have very little control over their resources. In other words, the government owns all the resources and tells the business what to produce and at what cost the products are going to be sold. The government also decides how much of a product is produced. This type of economic system is commonly reffered to as socialism.

The traditional economic system is based off of previous systems in the ways of allocating goods and services. In other words, the resources are allocated by inheritance of previous social standards. The people control the economy and produce their own goods and services based off of what their family has done in the past. The tradtional type of economy is continually dying out as our society continues to change drastically. It is being replaced with command and market economies due to the fact that one tradtion is not going to last forever and people are begining to see the disadvantages of the traditional economic system.media type="youtube" key="SNDtbAVXuQU&hl=en&fs=1" height="344" width="425" This video shows the differences of the economic systems. Comparing the systems of Hong Kong and the US are market systems, and Cuba is a command system.

QUESTION TO TEST YOUR KNOWLEDGE:

//Fill in the blank// In a system, if I were to use the lassiez-faire idea of economics, the economic system I would be going by would be __________.

Answer below links

Economic System Links:

--[|Wikipedia] Describes different kinds of economic systems, how they are used, and what they go by. --[|Answers] Describes and compares the differences of the different economic systems: market, command, mixed, etc. --[|Socyberty]  Describes the advantages and disadvantages or the three main economic systems.


 * Answer: Market System