ECON 1 Study Guide - Quiz Guide: Planned Economy, Mixed Economy, Economic System

• School: UC-Irvine
• Department: Economics
• Course: ECON 1
• Professor: Amanda Brindley

Document Summary

Economic systems are based on a society"s conditions, values, and goals. A traditional economy resists change and any influxes of innovative ideas because its system lays a foundation on traditional values and customs. They do not embrace societal or economic betterments nor do they have effective mechanisms for dealing with shortcomings. Thus, the people living in traditional economies have a low standard of living. A market economy, also called the free market, or capitalism, propagates the exercise of trade and the notion that individual choices will determine what goods and services are produced. A command economy is regulated entirely by the government. The people cannot deviate from the government"s economic laws, and thus have limited economic freedoms, which may or may not detriment people"s standard of living. A mixed economy is a combination of a free market and a command economy. Provide your own example of two unequal factor payments.