use the graph of the theory to help them figure out the answer. Although at the introductory level, you can

sometimes figure out the right answer without applying a model, if you keep studying economics, before too

long you will run into issues and problems that you will need to graph to solve. We explain both micro and
macroeconomics in terms of theories and models. The most well-known theories are probably those of supply
and demand, but you will learn a number of others.

1.4 How To Organize Economies: An Overview of Economic Systems

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Contrast traditional economies, command economies, and market economies

• Explain gross domestic product (GDP)

• Assess the importance and effects of globalization

Think about what a complex system a modern economy is. It includes all production of goods and services, all
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