Assignment on Economic System

An economic system is the combination of the various agencies, entities (or even sectors as described by some authors) that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed economy is shown in the flow-diagram. The economics system involves production, allocation of economic inputs, distribution of economic outputs, landlords and land availability, households (earnings and expenditure consumption of goods and services in an economy), capitalists, banks (finance institutions) and government. It is a set of institutions and their various social relations.
The Four main kinds of Economic Systems are:- 1. Traditional Economic Systems,
2. Market Economic Systems
3. Command Economic Systems
4. Mixed Economic Systems
1) Traditional Economic Systems:
An economic system under which people produce just enough goods to feed their households with very little left for sale or for exchange in the market. Characteristics of Subsistence Economic Systems:
a) Production is geared towards subsistence (the family) and basic survival.
b) Trade is mainly by a barter system (direct exchange of goods and services).
c) Market and money are of little importance
d) Custom and traditions are major influences on what is produced and how products are allocated.
Examples:
i) Aborigines ii) Amazon Tribes
Advantages:
The main advantage of traditional economy is that this type of economics produces only those goods and services which are required for the survival or which they want to consume. Hence there is no surplus or wastage and hence it does not waste resources for goods and services which are unnecessary. Also in this economy people know exactly what their roles or job is and hence there is no duplication of effort.
Disadvantage:
However it suffers from certain disadvantages like this type of economy