Economic Systems

Question 1

Advantages of Traditional Economy

Answer 1

Only produces what is necessary for its own survival. There is little disagreement over economic goals and roles

Question 2

Disadvantages of traditional Economy

Answer 2

They are less productive because they resist change. The have low productivity because sometimes people are in the “wrong” jobs

Question 3

Advantages of Command Economy

Answer 3

Resources are quickly and effectively mobilized on a large scale. Production rates can be adjusted to meet the exact needs of the population

Question 4

Disadvantages of Command Economy

Answer 4

The government has complete control of businesses which could scare people away from starting one. There is no innovation due to full control of production and sale

Question 5

Advantages of Market Economy

Answer 5

Gives producers an incentive to produce goods that consumers want. Competition pushes businesses to be efficient which keeps costs down and production high

Question 6

Disadvantages of Market Economy

Answer 6

Produces a large gap between the rich and the poor because of skewed income. Unemployment rates go up due to overproduction of goods.

Question 7

Advantages of Mixed Economy

Answer 7

Encourages lesser differences between income. Working will be encouraged as well because of the freedom to obtain property

Question 8

Disadvantages of Mixed Economy

Answer 8

Heavy taxes reduce incentives to work hard or make profits. Can have added costs due to excessive business control