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For Students in MICRECO 2 Semester AY 2018-2019 Saint Paul School of Professional Studies

The document summarizes four main types of economic systems: traditional, market, command, and mixed. A traditional economy is family or community-based and relies on customs, with examples like indigenous tribes. A market economy is consumer-based and relies on competition, with examples like the US. A command economy has a centrally-controlled government making all decisions, like North Korea. A mixed economy incorporates aspects of both government and private enterprise, like in most modern societies including the Philippines.

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Christine Jawid
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136 views17 pages

For Students in MICRECO 2 Semester AY 2018-2019 Saint Paul School of Professional Studies

The document summarizes four main types of economic systems: traditional, market, command, and mixed. A traditional economy is family or community-based and relies on customs, with examples like indigenous tribes. A market economy is consumer-based and relies on competition, with examples like the US. A command economy has a centrally-controlled government making all decisions, like North Korea. A mixed economy incorporates aspects of both government and private enterprise, like in most modern societies including the Philippines.

Uploaded by

Christine Jawid
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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For students in MICRECO

2nd semester AY 2018-2019


Saint Paul School of Professional Studies

Maria Charito Lorenzo Suyom


Four types of Economic System
Four very different types of economic systems
have evolved as different societies have placed
different emphasis on different goals and priorities in
their efforts to answer the economic questions.
Traditional Economy
 Family or community-based economic system that
relies on custom and ritual to make choices.
 Examples:
 Aborigines
 Amazon tribes
 Aetas
 Mangyans
 Other subsistence economies
Advantages
 It centers around the family. The needed skills for
production is handed down to the next generation.
 Allows movement and freedom. Traditional economies
are nomadic by design which allows each family group
to follow migration or seasonal patterns of food
growth. They rarely need to trade with outside world
because they are able to produce everything they
need(subsistence economy).
 Only produces what they require. Surplus is rare.
 Heavily relies on the barter system.
Advantages
 Evolve into a different type over time. Once a
traditional economy can settle into a routine which
involves farming, a surplus will eventually develop
through improved growing methods. With surplus,
the economy will barter it with neighboring groups.
Eventually, it can lead to developing of currency.
 Friction is rare. Everyone follows the traditions and
customs that are set forth by the elders.
 Friendly to the environment. This economic system
does not operate on a mass scale. They are less
destructive to the environment.
Advantages
 Isolates population groups from outside world. People
create their own natural defenses leading to stronger
immune system and a better quality of life.
 Focus skills on individuals.
Disadvantages
 High levels of competition among groups and
communities for available resources
 High vulnerability in natural calamities, which would
lead to starvation, sickness/diseases
 High vulnerability to other economy types.
 Few options to expand personal horizons. Each
member has a role to play in the economy. One can only
assume and learn other crafts if someone dies or
disabled.
 It can devastate the environment. When production of
this type is not reflective of the needs of the
environment
Disadvantages
 Limited choices. One can only consume what it
gathered, hunted, and produced.
 Limits genetic variability because families tend to be
isolated causing defective offsprings.
Market economy
 Individual or consumer-based economic system that
relies on the consumption choices of consumers.
 Examples:
 USA
 Japan
 Any capitalist economy
Advantages
 Competition leads to efficiency because business that
have fewer costs are more competitive and make more
money.
 Innovation is encouraged because it provides a
competitive edge and increases the chance for wealth.
 A large variety of goods and services are available as
business try to differentiate themselves in the market.
 Economic activity is encouraged because one needs
money to live
 Freedom of individual choice
Disadvantages
 Disparity in wealth and mobility exists because wealth
tends to generate wealth.
 Results to environmental damage
 Reduced social safety nets
 Poor working conditions due to lack of government
regulations
Command Economy
 Centrally-controlled economy where the government
makes all the economic decisions.
 There are no private enterprise in this type of economy
 Example:
 Cuba
 China
 North Korea
 Any communist or dictatorship economy
Advantages
 Low-levels of inequality and unemployment
 Common good replaces profit as the primary incentive
of production.
Disadvantages
 Lack of competition therefore hinders innovation
 Lack of efficiency
Mixed Economy
 Economic system that incorporates some
governmental involvement into a market-based
economy.
 Examples:
 Most modern economies
 Philippines
Advantages
 Promotes quick economic development because both
public and private sectors can operate equally.
 Creates balance in regional developments
 Encourages lesser income inequality, where
inheritance law is applied to enable members of the
society to become richer. For the public sector, it
would provide economic utility to the general public.
 Provides freedom to own a private property
Disadvantages
 Brings about the fear of nationalization (private
enterprise be taken over by the government)
 It could risk the government to go too far because it is
believed that government would manage the economy
poorly, so its involvement is regarded as inappropriate.
 Lesser use of resources because government could
hinder maximum use of available resources.
 It can lead to higher taxes

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