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Traditional Economies

A traditional economic system is a system that functions through traditional agricultural practices and stays rooted to customary policies. Traditional economic systems are based on fishing, hunting, and agriculture and will often use the practice of bartering instead of using money. A traditional economy is usually seen in nomadic societies, where a society will live in large groups and live off the land. The hunter/gatherers in these economies can become farmers but do not have enough resources since technology is not used as much, if at all.

This results in groups requiring fewer resources to provide for their families/tribes and groups being more self-sufficient. There may be competition among neighboring groups for limited resources and economies primarily focus on one’s own family or tribe. In traditional economies, economic decisions are made to follow long practiced customs and traditions.

Nowdays, the use of cash is important to traditional economies because it enables traditional economy members to purchase more efficient farming and hunting equipment from market economies. Even though traditional economies exist outside of western economies, interaction with market or command economies is needed to maintain production.

In traditional economies, the roles and practices that exist within the economy are well known and understood by members of the group. This means that all members within the group understand the production process and what their role is in production. Traditional economies are much less environmentally destructive compared to market economies because they do not rely as much on technology and they use traditional practices.

A disadvantage of traditional economies is that production relies heavily on the environment, making them dependent on nature and weather, which can be unpredictable. The dependence on nature and weather results in limited economic growth for traditional economies, demonstrating why they are less efficient than an economy who uses modern practices. 

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Monopolistic Competition, Monopoly, and Oligopoly

I am confused on the differences in how these types of firms make profits. How is a monopolistically competitive firm like a monopoly, and how is it like perfect competition? Why doesn't the monopolistically competitive firm, enjoy long-run economic profits like the oligopoly and monopoly since they all 3 have downward-slopin