Economic system

Economic System

An Economic System (pronunciation: /ˌiːkəˈnɒmɪk ˈsɪstəm/) is a system of production, resource allocation, and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.

Etymology

The term "Economic System" is derived from the Greek word "oikonomia" which means "management of a household" and the Latin word "systema" which means "an organized scheme or method".

Types of Economic Systems

There are four primary types of economic systems in the world: traditional, command, market, and mixed. Each economy has its strengths and weaknesses, its sub-economies and tendencies, and, of course, a troubled history.

Traditional Economy: It is a system where traditions, customs, and beliefs shape the goods and services the economy produces.
Command Economy: It is a system where the government determines what goods should be produced, how much should be produced, and the price at which the goods are offered for sale.
Market Economy: It is a system where the laws of supply and demand direct the production of goods and services.
Mixed Economy: It is a system that combines characteristics of market, command, and traditional economies. It benefits from the advantages of all three while suffering from few of the disadvantages.

Related Terms

External links

Medical encyclopedia article on Economic system
Wikipedia's article - Economic system

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