REPORTER:

CEDRON, SHIELA G.

An economic system is a set

of economic institutions that
dominates a given economy.

Economic system is a system

adopted by a society to deal
with economic problems.

An institution is a set of rules

of conduct, established ways
of thinking, or ways of
doing things.

What is the principal objective

of an economic system?

to solve the basic economic

problems

What?.

How?.
Who?.

4 Main types of Economic

System :

Traditional Economic System

Market Economy
Command Economy
Mixed Economy

TRADITIONAL ECONOMY
SYSTEM
Economic decisions are
made based on customs
and traditions.

Characteristics:
It is based on agriculture,
fishing, hunting, gathering
or combination.
It is guided by traditions
It may use barter instead of
money

Advantage:
Traditional economies are
usually less destructive to
the environment, and are
therefore sustainable.

Disadvantage:

Very vulnerable to changes in

nature, especially the weather.
They are more vulnerable to
market or command economies
that have superior resources to
wage or take away needed
natural resources.

MARKET ECONOMY
Economic decisions are
made by the market system
or simply the demand and
supply condition.

Characteristics:

Private property
Freedom of choices
Motive of self-interest
Competition
System of markets and
prices
Limited government

Advantage:
It ensures the most desired
goods and services are
produced
Good and services are
produced in the most
efficient way possible.

Advantage:
Innovation is rewarded.

The businesses and

individuals who are most
efficient and innovative will
accumulate more capital.

Disadvantage:
A market economy
functions through

competition.
Rewards those who are

good at being competitive.

COMMAND ECONOMY
Economic decisions are
made by the government.

Characteristics:
The government creates a
central economic plan for
all sectors and regions of
the country.
The government allocates
all resources according to
the central plan.

Characteristics:
The central plan sets the
priorities for production of
all goods and services.
The government owns a
monopoly business in
industries deemed
important to the goals of
the economy.

Characteristics:
The government creates the
laws that regulate
economic activity.

Advantage:
Centrally planned
economies are great at
mobilizing economic
resources quickly,
effectively and on a large
scale.

Advantage:
Command economies are
also good at wholly
transforming societies to
conform to the planner's
vision

Disadvantage:
Command economies mow
down other societal needs.
Command economies often
produce too much of one
thing and not enough of
another.

Disadvantage:
Command economies are

not good at stimulating

innovation.
Centrally planned
economies also have

trouble producing the right

exports at global market
prices.

MIXED ECONOMY
A mixed economy seeks to
have all the advantages of
a market, command and
traditional economy with
little of the disadvantages.

Characteristics:

Most allow government to

have a command role in areas
that safeguard the people and
the market itself.
Most mixed economies follow
traditions that have been so
ingrained that they may not
even be aware of it.

Characteristics:

The global economy is

primarily free-market based.
There is very little government
control, although some
regulations and agreements
have been put into place.

Bibliography:
Camba, Aileen L., Maniego, Norie L., Ronan, Jose
R., Payumo, Casiana Salud., Understanding
Economics
Gabay, Bon Kristoffer G., Remotin, Roberto M.
Jr., Uy, Edgar Allan M., Economics: Its Concepts

& Principles (with Agrarian Reform & Taxation)

2007

Tullao, Tereso S. Jr., Understanding Economics

in the Philippine Setting, Phoenix Publishing
House 2002

next is.
Economic Goals