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1 Three Essential Questions of Production, Study notes of Market economy

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 ...

Typology: Study notes

2021/2022

Uploaded on 09/12/2022

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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.
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.
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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.

Notes:

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Definition: An economic system is a collection of formal and informal institutions, laws, systems of beliefs, and

values which provide a framework for collective decision making.