This material confuses the heck out of so any help will be greatly appreciated. Thanks.
exchange economies are based on mostly importing and exporting goods, but very little producing... production economies still trade but produce and manufacture most of their own goods... china is a good example of a production economy. prices will be higher for goods in an exchange economy because of the "shipping and handling" charges... where as prices in a production economy would generally be lower because most goods are made inside of the economy.
i.e. gucci is expensive in america because it is an imported good, where as in italy it is much cheaper because it's produced and manufactured in italy.
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