There are three questions that are always asked when it comes to our economy. The first one asks what goods and services should be produced. The second questions how these goods and services should be produced. Finally the last question consists of asking for whom the goods and services be produced for. There are three different types of economies that address these questions in both similar and different ways.
All three of these types of economies are systems in which all reflect a different priortization of economic goals. A traditional economy relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it. Traditional economies are found in rural, non-developed countries. Some parts of Asia, Africa, South America and the Middle East have traditional economies. Customs govern the economic decisions that are made. Technology is not used in traditional economies.Farming, hunting and gathering are done the same way as the generation before. Economic activities are usually centered toward the family or ethnic unit. Men and Women are given different economic roles and tasks. In a market economy, economic decisions are made by individuals and are based on exchange or trade. Resources are owned and controlled by individuals. Economic decisions are made by individuals competing to earn profits. Individual freedom is considered very important. Economic decisions are made by the basic principals of supply and demand. Profit is the motive for increasing work rather than quotas. In a command economy, its resources are allocated by the government or central authority. The government or other central authority makes decisions and determines how resources will be used. Change can occur relatively easily. There is little individual freedom. There is no competition. Businesses are not run to create a profit. Consumers have few chooses in the market place. Factories are concerned with quotas. Shortages are common because of poorly run factories and farms. The government dictates the job in which you work. Consumers have few chooses in the market place. Factories are concerned with quotas. Shortages are common because of poorly run factories and farms. The government dictates the job in which you work.