Economic Systems

ECONOMIC SYSTEMS
The economic system is the means through which
society determines the answers to the basic economic
problems mentioned. A country may be under any of
the following types or even a combination of the three
economic systems:
 ECONOMIC SYSTEMS

1.Traditional economy. Decisions are based on

traditions and practices upheld over the years
and passed on from generation to generation.
Methods are stagnant and therefore not
progressive. Traditional societies exist in
primitive and backward civilizations.
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2. Command economy. This is the authoritative
system where in decision-making is centralized
in the government or a planning committee.
Decisions are imposed on the people who do
not have a say in what goods are to be
produced. This economy holds true in
dictatorial, socialist, and communist nations.
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3. Market economy. This is the most democratic
form of economic system. Based on the
workings of demand and supply, decision are
made on what goods and services to produce.
People’s preferences are reflected in the prices
they are willing to pay in the market and are
therefore the basis of the producers’ decisions
on what goods to produce.