- In this case, the government commands all markets, determining what to produce, how to produce, and for whom to produce.
- Ownership of property and goods is determined in the private sector, and the government does nothing to interfere with any market.
- The economy willproduce the goods andservices it has producedfor generations basedon what the ancestorsproduced.
- Competition incentives firms to lower prices, increase quality, and/or use resources more efficiently.
- Firms will produce whatthey believe consumerswill want to buy.
- Production and distribution of goods and services are based on how past generations made and distributed goods.
- Firms will try to producegoods and services usingmethods they believewill result in sellinggoods and services forthe most profit, but thegovernment may taxfirm profits or mandateproduction processes
- Private individuals and firms control all resources, and the price and quantity of all goods are determined by the interaction of demand and supply in unrestricted, open markets.
- Firms will producegoods and services usingmethods they believewill result in sellinggoods and services forthe most profit.
- Individuals and firms inthe society who arewilling and able to paythe price of the good orservice will obtain it.
- Since the government is in charge of everything, citizens should all receive equal amounts of basic goods and services.
- There is little to no competition among individual firms so there is little incentive to innovate, increase quality, or lower prices.
- The economy willproduce what thegovernment or centralplanner says it willproduce.
- Also called a capitalistic or free-market system.
- Property rights are based onhistorical property rights and transfer of property would follow traditionalrules of the culture
- The economy will passthe same productionmethods used in thepast from generation togeneration.
- The economy willproduce using whatevermethods thegovernment or centralplanner says it will use.
- Economic decisions are based on rituals and routines
- Many firms will producewhat they believeconsumers will want tobuy, but governmentmay restrict theproduction of certaingoods or produce publicgoods.
- The economy willdistribute the goods andservices to whomeverthe government orcentral planner saysshould get it.