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Economic System

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1. Economic system serves as the way how a society solve its economic problems and determine how the resources will be allocated to prevent scarcity.It also involves the mechanism for production, distribution, and exchange of goods apart from consumption of the goods and services within the different entities

2. Types of Economic System :

-Traditional Economy- it is a form of economy that is based on traditions and only focus on what is essential and the needs only of the people in the society.

-Market Economy - it is a form of economy that supply and demand serves as the main factor for production of goods and services. It is a free market so there is no intervention of government.

- Planned or Command Economy - a form of economy that is controlled by its government,from production to allocation of resources of the society.

- Mixed Economy-a form of economy that combines planned and market economy. The market is able to exercise its function but with the regulations of the authority. It is the most common form of economy now.

3. Production- turning raw materials or input into products or output to be sold or perished by consumers.

Distribution - it is the allocation of goods and products to the individuals in the society.

Exchange - it is the transferring of goods or products in return of something.

Consumption - utilization or using for personal purposes of products or goods.

Public Finance- the method of funding of the government like borrowings or taxation for public use.

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