Question

There are three basic economic systems: traditional economies, command economies, and market economies. For EACH economy describe how the three basic economic questions are answered:
1. What should be produced?
2. How should it be produced?
3. For whom should it be produced?
You must use complete sentences when writing your response.

Answer 1

Traditional Economies

What should be produced? In this kind of economic system, what is produced is based on custom and the habit of how such decisions were made in the past.

How should it be produced? The methods of production  are primitive. Bartering, or a system of trading in goods  and services, replaces  currency in a traditional  economy.

For whom should it be produced? The primary group for whom  goods and services are  produced in a traditional  economy is the tribe or  family group.

Command Economies

What should be produced? In a command economy, the  central government decides  what goods and services will be  produced, what wages will be  paid to workers, what jobs the  workers do, as well as the prices  of goods.

How should it be produced? In a command economy, no one  can start

their own business.  The government determines  how and where the goods  

produced would be sold.

For whom should it be produced? In a command economy, the  government determines  how the goods and services  are distributed.

Market Economies

What should be produced? In a market economy, the  wants of these consumers and  the profit motive of the  producers will decide what  will be produced.

How should it be produced? Labor (the workers) and  management (the bosses/owners) together  will determine how goods will  be produced in a market  economy.

For whom should it be produced? In a market economy, each  production resource is paid  based on what is contributed  to the production of goods  and services.