1
In this type of
economic system, what
is produced is based on
custom and the habit
of how such decisions
were made in the past.
The methods of
production are
primitive. Bartering, or
a system of trading in
goods and services,
replaces currency in a
traditional economy.
The primary group for
whom goods and
services are produced
in a traditional economy
is the tribe or family
group.
In a command economy, the
central government decides
what goods and services will
be produced, what wages will
be paid to workers, what
jobs the workers do, as well
as the prices of goods.
Three Essential Questions of Production ~ Economic Understandings SS7E5a
Name_______________________________________Date__________________________________ Class 1 2 3 4
Traditional Economies Command Economies Market Economies Mixed Economies
What is
produced?
How is it
produced?
For whom is
it produced?
In a command economy, the
government determines how
the goods and services are
distributed.
In a command economy, no
one can start their own
business.
The government determines
how and where the goods
produced would be sold.
In a market economy, the
wants of the consumers and
the profit motive of the
producers will decide what
will be produced. A.K.A.
Free-enterprise, Laisse-
faire & capitalism
.
Labor (the workers) and
management (the
bosses/owners) together
will determine how goods
will be produced in a market
economy.
In a market economy, each
production resource is paid
based on what is
contributed to the
production of goods and
services.
Nearly all economies in
the world today have
characteristics of both
market and command
economic systems.
This means that most
countries have
characteristics of a
free market/free
enterprise as well as
some government
planning and control.
