Chapter 2 - Economic Systems & Decision Making

Market Economy

• System in which economic decisions are made by tradition and customes

• System in which economic decisions are made by the government

• System in which economic decisions are made by supply and demand

Traditional Economy

• economic decisions are made by tradition and customs

• economic decisions are made by supply and demand

• economic decisions are made by the government

Command Economy

• economic decisions are made by the government

• economic decisions are made by supply and demand

• economic decisions are made by tradition and customs

Examples of Command Economy

• China, North Korea, Russia

• UK, US, Hong Kong

• Brazil, Australia

Examples of Market Economy

• US, UK, Hong Kong

• China, North Korea, Russia

• Syria, Saudi Arabia

Scarcity

• a lot of something

• not enough of something

• to be afraid

economy

• the flow of wealth, goods, and services in a country

• not enough of something needed

• type of government system

Examples of Traditional Economy, more than one correct

• Maasia cattle traders in Africa

• US and Canada

• Mexico and France

• Eskimo fur traders in Alaska

Producers and consumers determine how to use resources and make goods based on supply and demand in the market, without government interference.

• Market Economy

• Traditional Economy

• Command Economy

• Mixed Economy

People use the resources they have to make only what they need to survive.

• Market Economy

• Traditional Economy

• Command Economy

• Mixed Economy