ECONOMIC SYSTEM

ECO01
 ECONOMIC SYSTEM
An economic system is a
set of mechanisms and
institutions that resolve
the what, how and whom
questions.
 ECONOMIC SYSTEM
The Three Fundamental
Economic Questions
1. What to produce?
2. How to produce?
3. For whom to
produce?
TYPES OF ECONOMIC
SYSTEM
1. Traditional Economic System
Economic decisions are based
on practices handed down
from one generation to another
Private ownership of resources
but readily shared to others in
the community.
TYPES OF ECONOMIC
SYSTEM
1. Command Economic System
State ownership of resources
Economic decisions are made
by central planners
TYPES OF ECONOMIC
SYSTEM
Market Economic System
Private ownership of resources
Interaction of buyers and
sellers govern the market
TYPES OF ECONOMIC
SYSTEM
. Mixed Economic System
It is not actually an econ. Sys.
In reality all economic systems
are combinations of traditions,
state regulations and
capitalism
Econ System Ownership Decision Motivation
TRADITIONAL communal tradition social
COMMAND state centralized equality
MARKET private buyers/sellers profit