The primary group for whom goods and services are produced in a traditional economy is the tribe or family group. 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.
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Wherefore, how does a command economy affect citizens?
Command economy advantages include low levels of inequality and unemployment, and the common good replacing profit as the primary incentive of production. Command economy disadvantages include lack of competition and lack of efficiency.
In addition to that, what are the 3 economic questions that must be answered? Every society must answer three economic questions: What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?
Hence, how does traditional economy answer the 3 economic questions?
economies answer the economic questions of (1) what to produce, (2) how to produce, and (3) for whom to produce. What is produced? based on custom and the habit of how such decisions were made in the past. Many traditional economies are found in rural areas where people depend on members of their extended families.
What is traditional economy example?
Societies with traditional economies depend on agriculture, fishing, hunting, gathering, or some combination of them. They use barter instead of money. Most traditional economies operate in emerging markets and developing countries. They are often in Africa, Asia, Latin America, and the Middle East.
13 Related Questions Answered
The command economy is a key feature of any communist society. Cuba, North Korea, and the former Soviet Union are examples of countries that have command economies, while China maintained a command economy for decades before transitioning to a mixed economy that features both communistic and capitalistic elements.
Since its establishment in 1949 and until the end of 1978, China maintained a centrally planned, or command, economy. The state directed and controlled a large share of the country's economic output; the state set production goals, controlled prices, and allocated resources throughout most of the economy.
The economy of North Korea is a centrally planned economy, where the role of market allocation schemes is limited, although increasing. As of 2020, North Korea continues its basic adherence to a centralized command economy.
Its goal is to supply enough food, housing, and other basics to meet the needs of everyone in the country. It also sets national priorities. These include mobilizing for war or generating robust economic growth.
The main economics problem are:
- What to Produce in which quantities?
- How to Produce?
- For whom to Produce?
The four basic economic questions are (1) what goods and services and how much of each to produce, (2) how to produce, (3) for whom to produce, and (4) who owns and controls the factors of production. In a capitalist economy, the first question is answered by consumers as they spend their money.
Before goods and services can be distributed to households and consumed, they must be produced by someone, or by some business or organization. For example, most firms with large amounts of money invested in factories and equipment are organized as corporations. ...
Each economy functions based on a unique set of conditions and assumptions. Economic systems can be categorized into four main types: traditional economies, command economies, mixed economies, and market economies.
Exchange of goods is done through bartering. trading without using money. In a traditional economy, who decides what to produce? People follow their customs and make only what is needed to take care of oneself.
National economic goals include: efficiency, equity, economic freedom, full employment, economic growth, security, and stability.
Advantages of a Traditional Economy Traditional economies produce no industrial pollution, and keep their living environment clean. Traditional economies only produce and take what they need, so there is no waste or inefficiencies involved in producing the goods required to survive as a community.
Characteristics of a Traditional Economy
- Traditional economies are often based on one or a few of agriculture, hunting, fishing, and gathering.
- Barter and trade is often used in place of money.
- There is rarely a surplus produced. ...
- Often, people in a traditional economy live in families or tribes.
Goals- Stability, freedom, security, equity, growth, efficiency.