ECONOMIC SYSTEM
Societies create rules and institutions.
Producing goods and services. 
Economic systems based how these elements are organised
Deal with basic economic issues.
What to produce
For whom
Tradition based economic systems.
People developed economic systems based on
Customs
Laws
Beliefs
Organisations, regulated and established rules of production
Production constantly changing due to technological innovations.
Tradition-based socities experienced little change.
Preserving the community more important incorporating practice
Tradition based systems allow for very limited economic growth.
Many cases, production, restricted.
Self-consumption
Subsistence
Households follow these principles:
Purchase very few goods and consume what they produce.
Generate very little surplus.
Production is limited to achieving self-sufficiency.
Capitalism and the free market system.
Is a socioeconomic system based on following factors
Private ownership
Investment of capital
Free market.
Includes physical and financial capital.
Order to maximise potential profits.
Decision regarding what to produce.
Regulates production + sale of products, services based on the prices established.
By supply and demand.
Price
Prices decrease.
Demand.
Value assigned to a product or service
Products, services that consumers want to buy for a specific price
Supply is high but the demand is low
Prices increase.
Demand is high but the supply is low
Shortage of products.
Creates a surplus.
The central planning system.
Interaction between supply and demand determines
Determines the production on what to produce.
In a central planning system, authority, represented by state.
This system, was developedin communities countries.
In economies, the aim is to achieve greater social equality.
Prevent injustices caused by the unequal distribution of wealth.
States makes number of predictions based on set of economic obejctives.
Determine which goods or services they should produce.
How to produce them and who to produce them for.
This system is not always efficient.
Only North Korea continues to follow this economic system.
Mixed economic system.
Most countries have mixed economic system.
Sytem to avoid negative effects of unequal distributon of wealth.
In a free market and the lack of efficiency.
Free market deals with basic economic problems.
States acts as an authority
Help guarantee equal oppurtunities.