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Economic system - Coggle Diagram
Economic system
CAPITALISM AND THE FREE MARKET SYSTEM
Capitalism
is a socioeconomic system based on the following factors
Following factors:
Private ownership
of the means of production, which includes physical and financial capital.
Investment of capita
in economic activity in order to maximise potential profits.
free market.
The decision regarding what to produce is determined by the economic agents
Value
Price
the value assigned to a product or service
supply
the products available on the market for a specific price, during a certain period.
Demand
the products or services that consumers want to buy for a specific price and under certain conditions.
Prices
Prices increase
When the demand is higher than the supply
Prices decrease
When the supply is higher than the demand
TRADITION-BASED ECONOMIC SYSTEMS
systems based on beliefs, customs and laws
hese organisations regulated and established rules of production for each trade
They also determined how the trade should be carried out.
For example, in feudal Europe, artisans in cities formed guilds
technological innovations.
Tradition-based societies experienced little change
reserving the community was more important than incorporating new practices
Tradition-based systems
self-consumptio
subsistence
THE CENTRAL PLANNING SYSTEM
Free market
social equality