down from a ruler or ruling class. Ancient Egypt was a good example: a large part of economic life was devoted

to building pyramids, like those in Figure 1.8, for the pharaohs. Medieval manor life is another example: the

lord provided the land for growing crops and protection in the event of war. In return, vassals provided labor

and soldiers to do the lord’s bidding. In the last century, communism emphasized command economies.

In a command economy, the government decides what goods and services will be produced and what prices it

will charge for them. The government decides what methods of production to use and sets wages for workers.

The government provides many necessities like healthcare and education for free. Currently, Cuba and North

Korea have command economies.

FIGURE 1.9 A Market Economy Nothing says “market” more than The New York Stock Exchange. (Credit: work by

Erik Drost/Flickr Creative Commons, CC BY 2.0)
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