Drag and drop the answer to the correct box. Traditional economy Free enterprise or Market economy or Communist or Types of Economic Systems or Socialist or economy economy economy Who owns land business property? Owns all factors of production -land, factories, machines (for the people) owners own land, factories, etc. (could inherit) Ex. Electricity, public transportation, Nationalized industry. Motive - goal is to feed family, possible small surplus to buy/ exchange for needs. (Revenues>costs) Entrepreneurs invest to achieve this goal (classless society) of capitalism To preserve Role of Chief/ elders allocate lands based on needs To reduce poverty and inequality of free Make all economic government decisions. (otherwise hands off or leave alone) market Supply & demand AND Government subsidies (health, education, Government: Mostly (exchanging goods/ services) Limited trade, little surplus, few markets necessities prices set artificially low; luxuries expensive/ transport etc) unavailable What determines price? determine price in a free market. Determined by Wages determined by market. Market AND welfare Who gets what? Tradition based government: causes state To a certain extent all Only small, isolated, Examples: economies Most countries

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.