Command Economies
Advantages:
-can change direction drastically in a relatively short period of time
- many basic services (education, health, etc) are provided for little to no cost
Disadvantages
- not designed to meet the wants of the consumers
- little flexibility with day to day changes
- no incentive to work hard
- no room for individuality
* Communist, socialist, and authoritarian governments are all command economies
Market Economies
Advantages:
- adjust to change slowly over time
- high degree of individual freedom
- little to no government interference
- lots of goods and services
- high consumer satisfaction
Disadvantages
- doesn't provide basic needs of the society
- doesn't provide basic services
- people are subject to the rise and fall of the market
Capitalism - an economic system based on the private ownership of the factors of production
- the idea is that without any government interference, the producers will create the goods & services customers need
Features of a market economy:
-based on people's self-interest
- private property rights (private property includes anything you own - this includes INTELLECTUAL property)
- markets (any place/situation where goods and services are bought & sold; for example London, Amazon, Ebay, Ralphs)
Voluntary Exchange - trade where both partners think they're getting the better deal
- usually a trade of cash for a good or service
- driven by profit
Competition = different businesses selling the same or similar products compete to get your dollars
- produce better deals
- keeps prices lower
- ensures a better quality product
