 Way in which a nation uses its resources to satisfy it’s people needs and wants  Each Economic system answers four basic questions: › What and how much should be produced? › Who should produce them? › How they should be produced? › Who should share what is produced?

 All questions answered based on tradition › “The way things have always been done” › Based on custom & religious beliefs › Ex. Tribes in Africa  Products are probably high on detail, low quickness  Usually produce for the Tribe only

 Government controls all factors of production › Makes all decisions  No decisions are made by private businesses

 Private sector answers all four question › Decisions are made based on the Market:  Freely chosen activity between buyers and sellers  Ex. If the market has demand for cookies, someone will take advantage and make money  Market – the freely chosen activity between buyers and sellers of goods and services  Government gives no interruptions

 America is this, as is most other nations in the world: › Characteristics of Mixed and Characteristics of Command  Most nations lean heavily one way while adopting elements of the opposite