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ECONOMIC SYSTEMS - Coggle Diagram
ECONOMIC SYSTEMS
TRADITION-BASED ECONOMIC SYSTEMS
Depeloped economic systems
beliefs, customs and laws
little change on tradition
preserving the comunities went so important
livestock farming, main economic activity
production, strictly defined by old customs rules
self-consumption and subsistence
CAPITALISM AND THE FREE MARKET SYSTEM
Demand
products or services that consumers want
Prices decrease
creates a surplus
Supply
products available on the market
Prices increase
demand is high but the supply is low, there is a shortage of products
Price
value assigned a product or service
Investment of capital
economic activity, maximise potential
Private ownership
physical and financial capital
AUTHORITY: THE CENTRAL PLANNING SYSTEM
interaction between supply and demand
central planning system, an authority
Historically, this system was most developed in communist countries
Soviet Union and China are the main examples
ultimate aim is to achieve greater social equality and prevent the injustices caused by the unequal distribution of wealth.
The state makes a number of predictions
North Korea continues to follow this economic system
THE MIXED ECONOMY SYSTEM
Trdition-based economic system
How it is produced: based in old customs incorporated in rules and laws
What is produced: determined by the resources or by the power of the market to give an incentive
For whom is it produced: for the community
Free market system
How it is produced: at the lowest possible cost
For whom is it produced: determined by the market
What is produced: decided by the free market system of supply and demand
Central planning system
How it is produced: based on state´s goals
For whom is it produced: determined by need
What is produced: determined by the state
Mixed economic system
How it is produced: by private companies at the lowest cost and by the state based on its goals
For whom is it produced: determined by the market but the state guarantees equal opportunities
What is produced: determined by the free market and the state
