Types of Economies

Traditional Economy (survival)

- Economy based on customs & history

- People do what their ancestors have done 

- Ex. Inuits, ancient tribes

Free Economy (consumer based economy)

- Private property

- Profit driven

- Competition

- Consumer Sovereignty (power)

- Individual Choice

- Minimal Gov’t involvement

- Ex. Australia

Command Economy (gov’t based economy)

- Gov’t owns property

- No Competition

- No Individual Choice

- Gov’t makes all decisions

- Lots of Gov’t involvement

- Ex. North Korea, Cuba (rare)

Mixed Economy (both free and command)

- Individuals & biz make choices (private sector)

- Gov’t makes choices (public sector)

- Gov’t involvement (free < mixed < command)

- Ex. USA (most common economy)

The difference between economies = Gov’t Involvement