Question

What is an economic system in terms of resources and production?

Answer 1

There are limited resources available on this earth which has infinite number of alternate uses. also there are unlimited wants/desires of those limited resources. so on the basis of resource ownership and production, there are four cattegories of economic system. It is basically a system which shows how the economy works on the basis of resource ownership and production.

1. Traditional economy - this is basically the rural segment where the primary source would be farming or land related employment with lack of technological know how.

2. Command economy - here the resources and distribution lies in the hand of a centralized power, mostly a government.

3. MAkret system economy - in this the private players have self interest to determine how resources get allocated. there is no government intervention. the forces of demand and supply determines the resources and its production and distribution.

4. Mixed economy - this is a combination or mixture of both command economy and market system economy. there is forces of demand and supply and government intervention but both are limited.