What is an Economic System?
Because of the fact that there is scarcity of resources and unlimited wants, it is always a problem to allocate resources in an efficient manner. We are constantly facing three basic questions. These are:
- What to produce?
- How to produce?
- For whom do we produce?
Every community or country must choose and develop its own way of solving these problems. The way a country decides what to produce, how to produce and for whom to produce is called it Economic System.
The three Economic Systems existing are:
- Market Economic system
- Planned Economic System
- Mixed Economic System
Note:
- There are no PURE command economies
- There are no PURE market economies
- Instead there is a continuum of different characteristics
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