Economic Systems – Comparison Chart

1. Based on the information you gathered about economic systems this unit, complete the chart by answering the
questions about the different types of economic systems.

Traditional Command Free Market Mixed Economy

Economy Economy Economy
Who decides what
goods and services
will be provided?

Who decides how

the goods and
services will be
produced?

Who decides who

should share in the
use of the goods and
services?

Who owns the

factors of
production?

Advantages of this 1. 1. 1. 1.
type of system?

2. 2. 2. 2.

Disadvantages of 1. 1. 1. 1.
this type of system?

2. 2. 2. 2.
2. Place a checkmark in the column of the type of economic system that the statement describes.

Statement Traditional Command Free Mar-

ket
Cuba and North Korea have this type of system.
Everyone does what people in his or her family have
done.
The government determines the production and distri-
bution of goods.
Wages are set by the market based on supply and de-
mand
What will sell is what is produced.

What meets the goals of the government is what is

produced.
The same tools and methods are used that have been
used in past years.
A central authority makes the decision about economic
questions.
Prices are important in economic decisions.

This type of system is based on competition, incen-

tives and self-interest.
This system is considered to have a low standard of
living.
There is little change in this type of system over long
periods of time.
This type of system allows a great deal of freedom for
everyone involved.

3. Directions: Using the three definitions provided for the three major economic systems, choose the correct
economic system for each scenario.

Scenario #1 The Yanomamo

The Yanomamo are a South American Indian tribe living in spread out villages in the Amazon region of Brazil
and Venezuela. The Yanomamo had no contact with outsiders until the middle of the twentieth century. The
Yanomamo grow plantains and bananas for much of their food. They supplement this with hunting and gather-
ing palm fruit. They meet their basic needs without outside contributions or trade. The fathers teach their sons
how to hunt, the mothers teach their daughters to cook.

What economic system do the Yanomamo follow? _______________________

Scenario #2 Aruba
Aruba is a Caribbean Island off the coast of northwestern Venezuela. Aruba has an area of 75 square miles. Be-
cause of the dry and rocky terrain, most food must be imported. The island was “discovered” in the second half
of the twentieth century by vacationers. Now tourism dominates the economy. Hotels are privately owned as are
the restaurants. The government spends a lot of money trying to attract visitors to the island. The Smith family
is going to spend two weeks on vacation in Aruba. They will enjoy the beaches, water sports, the sunny
weather, great food, and many other exciting activities.
What economic system is exemplified in Aruba?_______________________

Scenario #3 Cuba
Fidel Castro took control of the island of Cuba at the end of the 1950’s and established a Communist govern-
ment. He was a dictator, a leader who made most of the decisions for his country. Now his brother, Raul, is
President. Government planners determine what is to be produced by industry and agriculture; prices are set and
farms, factories, and sugar mills are told how much they must produce. A factory manager is told he can only
ship his products to China.

What type of economic system does Cuba have?______________________

Scenario # 4 Inuit
The Arctic is a region of vast, treeless plains, icy seas, and barren, rocky islands. This harsh, cold land is the
home of the Inuit. For thousands of years they were isolated from other peoples because of their remote location
and difficult living conditions. They developed a way of life suited to their particular environment. An Inuit
man and his son would stand on the ice for many motionless moments. They were poised above a seal’s air hole
waiting with an uplifted spear. If they were successful in their hunt this father and son would use every part of
the seal; the meat and blubber for food, the skin for clothing, and the sinew for string and rope. This type of
hunting had been taking place for many generations in much the same way.

What type of economic system did the Inuit follow?____________________

Scenario # 5 Newfoundland
Newfoundland, Canada’s tenth province, occupies the easternmost part of North America. The extensive fishing
grounds, lying off the coast, are the reason why Newfoundland was settled, and fish remains one of its most im-
portant resources. The most important fish is cod. In the 19th and early part of the 20th century, the people in
Newfoundland were almost completely dependent upon fishing for their income. In the 1960s and 1970s New-
foundland’s fishing industry suffered from the effects of over fishing by fleets of ships operating off its coast. In
order to prevent the fish from being wiped out, the government limited the areas where fishing was allowed.
When that didn’t work, and the number of fish continued to decline, the government had to declare a morato-
rium on fishing so the supply could increase. Today, once again, people can become commercial fishermen,
own their own boats, sell to any buyer, and make a profit, but the industry is still regulated by the government.

What type of economic system does Newfoundland have?____________________________________

Scenario # 6 Venezuela
Venezuela is the most northerly nation of South America. It has a long Caribbean and Atlantic coast on the
north and east. Neighbors include Colombia, Brazil, and Guyana. Venezuela’s economy is dominated by petro-
leum products that represent about 95% of the country’s exports. The petroleum industry is entirely government
owned. The country’s main trading partners are the United States, Germany, and Japan. Petroven, a Venezuelan
government owned corporation, might decide to reduce the production of oil from 2 million barrels per day to
1.5 million barrels per day. In order to make up for the loss of oil revenue, Petroven might raise the price of the
oil by 50%.

What economic system would allow the government to make decisions like this?_________________________
4. Read the characteristics below and decide to which economic system each belongs. Write “cap” for capital-
ism, “soc” for socialism, or “com” for communism.

1. _____ value cooperation and sharing the work

2. _____ value competition and hard work
3. _____ public and private ownership of the means of production
4. _____ public ownership of the means of production
5. _____ price of goods and services are determined by government
6. _____ price of goods and services are determined by the marketplace
7. _____ type of goods and services produced are determined by the government
8. _____ quantity of goods and services produced are determined by the marketplace
9. _____ quantity of goods and services produced are determined by the government and the marketplace
10. _____ government plays an active role in the economy to insure economic strength and social justice
11. _____ eventually government will not be necessary
12. _____ government should avoid interfering in the economy
13. _____ individuals and groups can start their own businesses
14. _____ government ownership of all businesses
15. _____ businesses operated for the benefit of the people
16. _____ businesses operated by owners and investors who take risks in search of profits
17. _____ the economic system of most nations of the world
18. _____ the economic system of the United States

5. Below are some concrete examples of situations that occur under different economic systems. Look at the il-
lustration and read the sentences that follow. Then, determine which economic system—capitalism, social-
ism, or communism— would most likely produce such a situation. Be prepared to defend your choice.

1. A farmer owns two cows and sells the milk to a government-owned dairy.
2. A farmer owns two cows and can sell the milk to any dairy.
3. A farmer is assigned two cows and a share of grazing land. All milk is sent to a government owned dairy.
4. The farmer decides to sell the milk at his roadside stand.
5. The government sets the price of the farmer's milk.
6. The price of the farmer's milk is determined by the amount of milk produced and the total amount people
want to buy.
7. The government determines the number of gallons of milk it wants each year and gives production goals to
farmers.
8. People buy the farmer's milk from a privately-owned store.
9. People buy the farmer's milk from a government-owned store.
10. People can shop around and buy milk from the store with the lowest price.
11. Because of a terrible milk shortage, the government takes control of the dairy industry and sets milk prices.
12. The farmer decides to sell one cow and use the money to buy a bull for the purpose of breeding more cows.