Example Of A Traditional Economic System example essay topic

Island of Mocha Essay The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed.

The Chief decided that they would use clam shell for currency instead of trading. The first type of economic system that they movie shows is a traditional system. A traditional economy is an economic system in which the allocation of scarce resources and other economic activity is the result of ritual habit or customs. In other words a traditional economy is a barter or trade system, everybody decides WHAT WHEN and FOR WHOM.

When the video first starts the Mochans had to trade all over the island to acquire what needed. After a while they had enough of trading the chief decided to switch to currency instead of trade. The economic system that they switched to is called a market economic system. A market economy is an economic system in which supply, demand, and the price system help people make decisions and allocate resources. So with a market economy you decide WHAT WHEN and FOR WHOM. In the movie Pablo the lumberman starts up a company and sells stock to allow him to be able to get all of the supplies needed.

Big Daddy had triplets and need lumber to make the nursery bigger, since they switched to a market economy he had no money because the islanders would give the chief a portion of what they had. So Big Daddy had to start a tax in order to pay for the expansion of the nursery. Since all the businesses were all doing so well every business wanted to expand so the demand for lumber was great which caused a lumber shortage, the lack of resources the price when up which cause inflation all over the island. With inflation going on Big Daddy had to do something in order to stop it. The island of Mocha was going in to a recession so Big Daddy took control and put a price freeze on everything. Now the economic system turned into a command economy.

A command economy is an economic system characterized by a central authority that makes most of the major economic decisions. It is like a dictatorship, a central authority tells people WHAT WHEN and FOR WHOM. With the price freeze on everything the neighboring Beaver Island was able to sell supplies cheaper that the Mochans. Many businesses went down and the Mochans had to find food and other supplies for themselves.

Big Daddy told Pablo to go exploring and find trees on other islands. As a result the price dropped and price returned to normal. Toward the end of the King Basel of Stoned island got in to and argument with someone from another island at a part and declared war on all of the outer islands. Big Daddy decided to stay neutral in the war. But this put a halt on Pablo exploration of the other island to find wood. So with Pablo unable to get wood the price of wood went through the roof and the Mochans got very angry at Pablo for the price increase.

So Pablo got himself in to a pickle at the end of the movie and he is going to have to deal with what happened.