Concepts.
Scarcity: is the situation that exists when are not enough resources to meet human want.
Economic system: is the way in which a society uses its scarce resources to satisfy it people’s unlimited wants. An economics system is the ways a society uses its scare resources to satisfy its people’s unlimited wants. There are basic three type of economic system Traditional economies, command economies, and Market economies. One is the mixed economies.
Traditional economies:
It is an economic system in which family’s clans or tribes makes economic decision to generation. The on goals of these societies in survival. Everyone has a set role in this task men are hunters and herders. Women tend the crops and raise children. The youngest help with everyday chores while learning the skills they will need for their adult roles. There is no chance of deviating from this pattern. The good of the group always take procedure over individual desire.
Command Economy:
In the command economy the government decides what goods and services will be produced how they will be produce, and how they will be distributed. In a command economy government official consider the resources and needs of the country and allocate these resources according to their judgment the wants of individual consumer are rarely considered. The government also usually own the mean of production all resources and factories. North Korea and Cuba are current example of command economies. Before the collapse of communication in Europe countries such as the Soviet Union, Poland and East Germany also were command economies.
Market Economy:
Market economy based on individual choice not government directive. In other words, in this system consumers and producers derive the economy. Consumer are free to spend their money as they wish. To enter into business, or to sell their labor to whomever they want. Producer decides what goods or services they will offers. They make choice about how to use their limited resources to earn the most money possible.
In market economy then, individual act in their own self-interest when they make economic choice. However, as they seek to serve their own interests, they benefit others as a consumer your choice to buy the products that best meet your wants. However, this benefits the producer who make those products, because the earn money from your purchases. As Adam Smith noted that in the wealth of Nation’s 1776. Why you make economic decision you act in your self-interest, but you are “led by invisible hands” to promote the interest of others.
Characteristics:
