Types of economy
What is a traditional economy?
A traditional economy is based on customs, traditions, and beliefs that have been passed down generation to generation.
What are two advantages of a traditional economy?
Everyone knows their role and strong sense of community.
What are two disadvantages of a traditional economy?
Limited technology and few choices of goods and services.
Supply-
The amount of something that is available.
Incentive-
The thing that motivates you to do something.
What is a command economy?
A command economy is an economy where the government makes most economic decisions.
What are two advantages of a command economy?
Resources can be sent where they are needed and essential services may be available to everyone.
What are two disadvantages of a command economy?
People have fewer choices and businesses have less freedom to innovate.
Demand-
The number of consumers who want it.
Market-
The entire activity of buying and selling that takes place out in the world.
What is an economy?
An economy is the way society decides how to use its resources to produce and distribute goods and services.
What are the three basic questions which every economy answers?
What to produce?
How to produce?
For whom to produce it?
There are 4 types of economies.
Consumer-
Someone who acquires goods and services for his or her own personal use.
Scarcity-
The limited amount of resources available.
What is a market economy?
A market economy is an economy where consumers and businesses make most economic decisions.
What are advantages of a market economy?
Many choices for consumers and competition encourages innovation.
What are disadvantages of a market economy?
Some people may not be able to afford certain goods and services and businesses can fail if consumers do not buy their products.
Producer-
Someone who makes goods or offers services to others.
Opportunity cost-
The benefit you give up by choosing to do one thing instead of another.
What is a mixed economy?
A mixed economy combines elements of both a market and a command economy.
What are advantages of a mixed economy?
Consumer choice and competition and government helps provide important services.
What are disadvantages of a mixed economy?
Balancing government involvement and business freedom can be difficult.
Profit-
Financial gain received by selling something for more than it costs to make it.
Full definition of enonomy-
An economy is the producing, consuming, and trading of goods, services, and resources involving many people, resources, and/or happening over a large area.