Answer the following questions for Traditional Economy, Command Economy, and Market Economy:
WHAT TO PRODUCE?
HOW TO PRODUCE?
FOR WHOM TO PRODUCE?
EXAMPLES
ADVANTAGES/ DISADVANTAGES
Traditional Economy:
WHAT TO PRODUCE? Goods and services are produced based on traditional customs, beliefs, and practices.
HOW TO PRODUCE? Production methods are passed down from generation to generation.
FOR WHOM TO PRODUCE? Goods and services are distributed based on social roles and customs.
EXAMPLES: Inuit tribes in Northern Canada, Aboriginal tribes in Australia.
ADVANTAGES: Supports preservation of culture and traditions. Promotes community cooperation and social cohesion.
DISADVANTAGES: Limited innovation and technological advancements. Can lead to economic stagnation.
Command Economy:
WHAT TO PRODUCE? Goods and services are determined by the government.
HOW TO PRODUCE? Production methods are centrally planned and controlled by the government.
FOR WHOM TO PRODUCE? Distribution is determined by the government based on needs.
EXAMPLES: North Korea, Cuba.
ADVANTAGES: Ensures equal distribution of resources. Can rapidly mobilize resources for large-scale projects.
DISADVANTAGES: Lack of consumer choice. Inefficiency due to lack of competition. Limited incentives for innovation.
Market Economy:
WHAT TO PRODUCE? Goods and services are determined by consumer demand and market forces.
HOW TO PRODUCE? Production methods are based on competition and efficiency.
FOR WHOM TO PRODUCE? Distribution is based on purchasing power and consumer demand.
EXAMPLES: United States, United Kingdom.
ADVANTAGES: Encourages innovation and efficiency. Offers consumers a wide range of choices. Allows for individual freedom and entrepreneurship.
DISADVANTAGES: Can lead to income inequality. Limited government intervention can result in market failures. May prioritize profit over social welfare.