What you’ll learn to do: describe and differentiate between major different economic systems
In a society, the economic system answers three fundamental questions:
- What do we produce?
- How do we produce it?
- For whom do we produce it?
Practically speaking, this translates as: who owns the factors of production, and who decides what and how much to produce, and associated pricing. This module introduces the three major economic systems: command, market, and mixed.
We’ll also discuss the characteristics and management implications of each system, such as the role of government or a ruler/ruling party. This section also highlights factors that interfere with the conceptually ideal free market system. Although a free and competitive market is the economic ideal in terms of efficiency, it may not be the ideal in terms of representing a society’s values.