lesson 4
1 the three major types of economic systems are ______________, ______________, and ______________.
2. today, traditional economies exist in very ____________________ of the world and are usually based on needs and customs of elders and ancestors.
3. as you read pgs. 94-96, put the following terms/phrases from the box below into the correct economic system on the next page.
individuals and private groups make decisions
businesses product what consumers want
government owns ‘means of production’
government controls distribution of goods
free enterprise
rights to own property
goods distributed evenly
make a profit
citizens have no voice
aka ‘socialism’ / ‘communism’
limited government interference
great variety of goods and services
aka ‘capitalism’
customers limited in their choices
lack incentives that foster innovation
people can slip into poverty

Question

Accepted Answer

### Question 1:
# Brief Explanations:
The three major types of economic systems are traditional economy, command economy, and market economy. Traditional economies are based on customs and traditions, command economies are controlled by the government, and market economies are driven by supply and demand with private ownership and free enterprise.
# Answer:
traditional economy, command economy, market economy

### Question 2:
# Brief Explanations:
Today, traditional economies exist in very few parts of the world. They are often found in isolated or less - developed regions where the influence of modern economic systems is minimal, and they rely on the customs and needs of elders and ancestors.
# Answer:
few parts

### Question 3:
To solve this, we first identify the three economic systems: Market Economy (Capitalism), Command Economy (Socialism/Communism), and Traditional Economy.

#### Market Economy (Capitalism) characteristics:
- Individuals and private groups make decisions (private ownership and decision - making power).
- Businesses produce what consumers want (consumer sovereignty).
- Free enterprise (freedom to start and operate businesses).
- Rights to own property (private property rights are a key feature).
- Make a profit (profit motive drives businesses).
- Limited government interference (government has a minimal role in economic activities).
- Aka 'capitalism' (this is another name for market economy).
- Great variety of goods and services (due to competition and consumer demand).
- Incentives that foster innovation (profit motive encourages businesses to innovate to gain a competitive edge).

#### Command Economy (Socialism/Communism) characteristics:
- Government owns'means of production' (the government controls resources and production facilities).
- Government controls distribution of goods (the government decides how goods are distributed).
- Goods distributed evenly (the goal is to have an equal distribution of goods).
- Aka'socialism' / 'communism' (these are the names for this type of economic system).
- Citizens have no voice (the government makes most economic decisions, and citizens have little input).
- Customers limited in their choices (the government decides what is produced, so consumer choice is limited).
- Lack incentives that foster innovation (since there is no profit motive, innovation is not strongly encouraged).

#### Traditional Economy characteristics:
- Based on needs and customs of elders and ancestors (as given in question 2).
- People can slip into poverty (since production is based on traditional methods and may not be very efficient, leading to poverty in some cases).

We can now categorize the terms:

| Economic System | Characteristics |
| ---- | ---- |
| Market Economy (Capitalism) | individuals and private groups make decisions, businesses produce what consumers want, free enterprise, rights to own property, make a profit, limited government interference, aka 'capitalism', great variety of goods and services, incentives that foster innovation |
| Command Economy (Socialism/Communism) | government owns'means of production', government controls distribution of goods, goods distributed evenly, aka'socialism' / 'communism', citizens have no voice, customers limited in their choices, lack incentives that foster innovation |
| Traditional Economy | (based on question 2: based on needs and customs of elders and ancestors), people can slip into poverty |

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