ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Each community decides who will produce and who will buy
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The elders decide based on the way things have always been done
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The three basic questions of production do not arise in this type of economy.
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Individuals form networks to buy, sell and trade as they choose
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Detailed explanation-1: -In a traditional economy, economic decisions are made by tradition and custom, rather than by markets or government. Usually, family elders or community leaders make the decisions about production, distribution and consumption of goods and services based on the needs and customs of the community.
Detailed explanation-2: -A traditional economy relies on custom and tradition t dictate production and consumption. The goals are economic security and stability. In a command economy, decisions about production are made by a powerful ruler or central authority. The goals are equity and security.
Detailed explanation-3: -A traditional economy is one which doesn’t operate under a profit motive. Instead, it emphasizes the trading and bartering of products and services that enable participants to subsist in a specific region, community and/or culture.
Detailed explanation-4: -In its purest form, a market economy answers the three economic questions by allocating resources and goods through markets, where prices are generated. In its purest form, a command economy answers the three economic questions by making allocation decisions centrally by the government.