Types of Economic Systems

There are four major types of economic systems in the world today: command, traditional, market and mixed economys.

In a command, or planned economic system, the government decides what is producted, who produces it and who recieves it. Althought the Soviet Union was supposedly had a communist economy, it was actually a command economy.

In contrast, in a market or free enterprise economy, the production and distribution of goods is dtermined by bussinesses and consumers. In a market economy, there is little to no government intervention.

A traditional economy is a system i which a person's occupation is determined by he occupation of thier predecesors. Traditional ecnomoys are largely restricted to rural or underdeveloped areas of nations.

A mixed economy is a mix of several economic systems. Mixed economys usually contain a mix of market and command systems, meaning a mix of private and state operated bussinesses.

The differnce between a communist and socialist state is that the goal of a communism is to have a stateless society, meaning no government, whereas a socialist society everything is the posetion of the government.

Opportunity Cost

Opportunity cost, as defined by my two economics teachers, is what one has to give up when making decision - a trade off, in essence. An example is that if I buy a new video game , I will not be able to buy my mother a birthday gift...I bought the game. Another, not so economic example is that if I dedicate my time to running, I will be unable to join the fencing club. The U.S government has to make trade offs all the time. Should they further the "War on Terror" by buying more, bigger weapons. Or should they invest in building roads.