communism and capitalism comparing the economic systems
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COMMUNISM AND CAPITALISMComparing the Economic Systems
Economy
How a country distributes money and wealth.
Goods A physical product that can be sold for
money.
Examples: clothing, cars, books, computers, food.
Services Anything someone does for money.
Examples: doctors, teachers, cleaners, mechanics
Producers The people who make goods in order for
them to be sold. Example: Nike, Apple, Honda
Consumers People who buy goods and services.
Sellers The middleman. Buys products from
consumers and sells it to consumers. Examples: Wal-Mart, Best Buy, Stop &
Shop
The Means of Production What a producer needs in order to
produce a good. Examples: Land, labor, raw materials,
machinery, power, factories
Cost of production How much money it costs to produce a
good. (How much money the means of production cost.)
Profit The money producers earn when the
costs of production are considered. Selling Price – Cost of Production = Profit
Whoever owns the means of production
gets to keep the profits.
Capitalism An economic system where private
individuals own the means of production.
Under Capitalism, private individuals get to keep the profits.
Example: Bill Gates owns Microsoft, so he gets to keep Microsoft’s profits.
Communism An economic system where the
government owns the means of production
Under Communism, the government keeps the profits. They decide how the profits are going to be divided among the people.
Under Capitalism Some people get to be very very rich,
while many people are poor. There is a high level of income
inequality.
Under Capitalism Good: More Freedom. Possibility of
moving into a higher class level.
Bad: Many poor people. Unemployment.
Under Communism Very few people are either very rich or
very poor. Very little income inequality.
Under Communism Good: Not as many poor people.
Everyone gets their basic necessities met.
Bad: Less freedom. Government makes a lot of decisions about your life.
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