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Economic Systems: an organized way of providing for the wants and needs of the people.
The use of resources stems from ritual, habit, or custom.
Individuals generally not free to make decisions.
Roles defined by customs of ancestors/elders.
Advantages: everyone knows what role to play, less uncertainty about WHAT, HOW, and FOR WHOM.
Command Economy: central authority makes economic decisions.
Severely limits private property rights.
Individual freedom limited.
Government officials tend to favor themselves.
Advantages: change direction quickly, many public services little/no charge.
Disadvantages: Ignore basic wants and needs of consumers, incentive to fill quotas instead of good product, no rewards for individual initiative.
Market Economy: people make decisions in own best interest.
A lot of buying freedom. Casting “dollar votes”.
Private ownership of resources.
Advantages: High degree of individual freedom, small amount of government intervention, resources go into what consumers favor the most, variety of goods and services, high degree of consumer satisfaction.
Disadvantages: does not provide for everyone, degree of uncertainty.
II. Mixed Economies
A. Socialism: government owns and controls some, not all resources. Government provides a lot of basic needs.
Communism: all property is owned collectively.
Advantages: Provide for people who may get left out.
D. Disadvantages: Higher taxes, limited availability and quality of goods and services.