Economics: Part 4 - The 4 Main Types of Economic Systems (Excluding the Command System)

What are the 4 Main Types of Economic Systems?

Traditional, Command, Market, and Mixed Economic Systems

Traditional Economic System

An example of a traditional economy can be found in the movie “Nim’s Island”. The island is set in Tuvalu, an island group nation consisting of nine coral atolls in the South Pacific Ocean

People from this island are mostly involved in traditional _______and_______ as sources of living.

Agriculture and Fishing

Economic Systems

An economic system, according to Clayon (2001), describes how the economy of a particular country is _______.

Organized

Economic Systems

The problem of scarcity _______ the need for an economic system to properly organize the utilization of productive resources

Strengthens

Economic Systems

A system is also significant in answering the three economic questions, such as:

1. ____ goods and services to produce

2. ____ will productive resources be produced to produce goods and services

3. ____ to produce or who will get the goods and services produced

1. What

2. How

3. For whom

Economic Systems

The way a society answers the three basic economic questions determines its _________.

Economic System

Traditional Economic System

A society is said to have a traditional economy when economic decisions are based on _______and_______.

Customs and Traditional Beliefs

What type of economic system among the 4 Main Types of Economic Systems does this situation refer to?

It happens when people make what they have always made and do the same work their parents did.

Traditional Economic System

What type of Economic System refers to system where the ways and procedures of an economy have been handed down from generation to generation?

Traditional Economic System

Based on this example:

A father is a rice farmer, he will teach the rudiments of farming to his son, and the son will also become a rice farmer because its traditions dictate that rice should be produced.

What kind of economic system is apparent in this situation?

Traditional Economic System

Traditional Economic System

In a traditional economy, most of the time, the exchange of goods is done through _______.

Barter

Traditional Economic System

In traditional economies, ______and______ answer the WHAT, the HOW, and FOR WHOM questions

Customs and Traditions

Traditional Economic System

The problem of production is solved by using the _________and_________.

Mechanism of culture and Tradition

Traditional Economic System

In a traditional economy, people are expected to _________and_________ on the type of production and the technology to be utilized.

Follow their customs and Let their elders decide

Traditional Economic System

In a traditional economy, the allocation is based on _________and_________. The male leaders of the community, the priests, and the elders enjoy a large share of the products in the community

Social Standing and Gender

Advantages of a Traditional Economic System

The traditional economy is ________, as skills to produce goods and services are handed down from generation to generation. The process of keeping traditions helps to keep the family units together

Family-oriented

Advantages of a Traditional Economic System

People in traditional economies are often ________. Hunting and gathering are ways to acquire food

Nomadic

Advantages of a Traditional Economic System

People will just _________________. The surplus is a rarity in this kind of economy

Produce what they need

Advantages of a Traditional Economic System

The traditional economy relies merely on the _________. Through bartering, goods for survival are being met

Barter System

Advantages of a Traditional Economic System

It is __________ in terms of answering the questions of WHAT, HOW, and FOR WHOM, since these are determined by customs and traditions

Very Predictable

Disadvantages of a Traditional Economic System

The weakness of the traditional economy is that it tends to ________________ and new ways of doing things. The word change is not a common word in this kind of society

Discourage New Ideas

Disadvantages of a Traditional Economic System

The ________________ of the traditional society have the effect of punishing its members for simply deviating or breaking the rules

Strict Rules and Regulations

Disadvantages of a Traditional Economic System

________________ and stagnation are another consequence of the traditional economy.

Lower Standards of Living

Among the 4 Main Types of Economic Systems, what system is the opposite of a command or planned economy?

Market Economic System

Market Economic System

The answers to the basic economic questions are highly dependent on _______.

Market Behavior

Market Economic System

Here, individual consumers and sellers _______ to solve the economic problems.

Interact

Market Economic System

The Market System is also referred to as a _______or_______.

Laissez-faire Economy or Free Market

Market Economic System

The French term laissez-faire translates to “_______”, which implies a complete absence of government involvement in the economy

Allow them to do

Market Economic System

Due to there being no unnatural barriers in all economic activities in the market economy, _______ persists.

Competition

Competition puts all buyers and sellers in _______.

Check

Market Economic System

In the market, the force of the invisible hand ensures that when [1]_______ maximize their profits and [2]_______ maximize their incomes, they can maximize the output and income of [3]_______.

1) Firms
2) Households
3) Society

Market Economic System

_______ forces firms to adopt efficient production techniques.

Competition

Market Economic System

_______ leads to innovation in both the techniques and products.

Competition

Market Economic System

The results of competition are _________ and a variety of choices.

Better Quality Products

Among the 4 Main Types of Economic Systems, what system is where all three basic economic questions are addressed by both the government and private institutions in consideration of their mutual benefit?

Mixed Economic System

Among the 4 Main Types of Economic Systems, this system is where the major control and power are in the hands of the government, yet individual enterprise still exists, and independent choice of its people is exercised.

What type of economic system is this?

Mixed Economic System

Mixed Economic System 

The _______ works on how the market works, and industries like the production and distribution of cellphones or pizza

Private Sector

Mixed Economic System 

The _______ (represented by the government) works on policies and regulations

Public Sector

The market is perfectly competitive if:

There is a large number of ________and________, so that no buyer or seller is influential enough to affect the price

Buyers and Sellers

The market is perfectly competitive if:

The buyers and sellers deal with ________________.

Homogeneous Products

Which factor that makes the market perfectly competitive does this example/situation/factor below refer to?

The market for table salt. It is always the same chemical formula, which is sodium and chloride.

The buyers and sellers deal with homogeneous products.

The market is perfectly competitive if:

Buyers and sellers ________________.

Act independently

Which factor that makes the market perfectly competitive does this example/situation/factor below refer to?

This factor ensure that sellers are competing against one another for the consumer’s peso, and consumers will also be competing against one another to get the best price for the goods and services.

Buyers and sellers act independently.

The market is perfectly competitive if:

Buyers and sellers have perfect _________ about the price.

Information

Which factor that makes the market perfectly competitive does this example/situation/factor below refer to?

The well-informed buyer will buy goods from the seller who offers the lowest price; thus, a well-informed seller will provide or match the low cost of their competitors to keep their customers.

Buyers and sellers have perfect information about the price.

The market is perfectly competitive if:

There are _________ to entry or exit from the market.

No Barriers

Which factor that makes the market perfectly competitive does this example/situation/factor below refer to?

There is complete freedom in terms of starting up or exiting the industry.

There are no barriers to entry or exit from the market.