Question

Identify the three types of economic systems. How do these three types of economic systems differ from each other? How are they the same? (

Answer 1

The three types of economic systems are: socialistic economy, capitalistic economy, and traditional  economy. The three types of economies differ on the basis of who decides the production and distribution of goods and services. In a socialistic economy, the government controls all means of production and decides what to produce, how to produce, and how much to produce. In a capitalistic economy, the market forces of demand and supply decide the production and distribution of goods. Such an economy is also known as free market economy and is usually found in advanced countries. A traditional economy is one in which the local people decide what and how to produce. These are usually farm economies where trade is limited and people consume their own produce either in households or community. Despite these differences, all the three types of economic systems serve the same purpose of deciding the primary economic concern of production and distribution of goods.