Unit 2: Types of Economies

Types of Eco. Systems:

1. Command (aka "centrally planned")-govt owns capital and land; controls labor (ex. Cuba)
2. Traditional-based on habits, rituals, and customs; decisions made by elders; discourages new ideas and technology (ex. tribes)
3. Mixed-businesses regulated by govt to protect public's interest (ex. U.S., Canada, Mexico)
4. Free Market-people and firms act in own best interest; buyers and sellers exchange goods and services (ex. Hong Kong-only true free market)

Three Eco. Questions:

1. What goods and services should be produced?
2. How should these goods and services be produced?
3. Who will consume these goods and services?

Market→an institution that allows buyers and sellers to trade
Households→a person or group of people that share an income
Firms→organization that produces goods and services for sell

Product Market	Factor Market (aka “Resource Market”)
·         Buyer usually consumer ·         Seller is a firm	·         Factors of production (4-land, labor, capital, entrepreneurship) ·         Buyer usually firm ·         Seller is factor owner