2 - Fundamentals of Economics

An economic system based on private ownership and the use of capital.

• Capitalism

• Communism

• Command Economy

• Socialism

An economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally.

• Capitalism

• Communism

• Command Economy

• Socialism

The central government makes all important decisions in the best interest of the society.

• Capitalism

• Communism

• Command Economy

• Socialism

An economic system in which factors of production are owned by the public and operate for the benefit of all.

–Private ownership is still allowed

• Capitalism

• Communism

• Command Economy

• Socialism

–letting owners of industry and business set working conditions without interference

■No government regulations, such as minimum wage laws

• Laissez faire

• Capital

Wealth in the form of property or money that is used to make more money.

• Laissez faire

• Capital

The government answers those questions. There's no private business. There's no private property. The government decides.

• Communism

• Capitalism

• Socialism

The people make those decisions. The businesses, the market decides how much products will cost, how many there are, where it will be made.

• Communism

• Capitalism

• Socialism

There's a mix of both. The government operates the system to help all, but there is opportunity for private property and private wealth.

• Communism

• Capitalism

• Socialism

Market Systems:

■Traditional Economy:

• Customs dictate the economic decisions

• In a market economy, decisions on how resources are to be allocated are usually taken by millions of households and thousands of firm

• In this second type of economy, the government has a central role in all decisions that are made and, unlike the market economy, the emphasis is on centralization.

• As its name indicates, it involves both private and public sectors in the process of resource allocation.