Economic Systems and Traditional Economies

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An organized way in which a society provides for the wants and needs of its people.

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Economic system

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What are the three types of Economic Systems?

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Traditional, Command, Market

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An economic system in which the allocation of scarce resources and other economic activities are based on ritual, habit, or custom is known as a

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traditional economy

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Where can you find Traditional Economies today in the world today?

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Remote rural areas and indigenous communities in Africa, Artic Circle and Australia

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What is an advantage of a traditional economy?

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Stability and predictability in economic activities.

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What is a disadvantage of a traditional economy?

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Discourage new ideas, Lack of progress, lower standard of living

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What kind of economy has a central authority make the major decisions about WHAT, HOW, and FOR WHOM to produce? Options: Traditional economy, Mixed economy, Command economy, Market economy

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Command economy

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What is an advantage of a command economy?

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Can change quickly, Little uncertainty

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What is a disadvantage of a command economy?

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No incentive to work hard, Requires a large bureaucracy, Very Rigid

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What kind of economy has people and firms decide act in their own best interests to answer the what, how, and for whom?

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Market economy