The document discusses different economic systems and how resources are allocated in each. It defines allocation as the distribution of natural resources to meet societal needs and wants. It then describes the four main economic systems: traditional economies rely on customs; command economies are led by dictatorial governments; market economies use supply and demand to allocate resources; and mixed economies combine government regulation with market forces.
2. ALLOCATION
is a wise distribution of natural
resources to different uses in order to
meet and satisfy the needs and
wants of society.
3. Economic System
An economic system is a means by
which societies or governments
organize and distribute available
resources, services, and goods across a
geographic region or country.
5. Traditional Economy
An economy in which decisions
are based on a larger socio-
cultural system shaped by
customs, traditions, and religious
beliefs
6. Command Economy
A command economy is usually led by a
dictatorial or a totalitarian government.
This means that the government has the
power to implement all its decisions,
including those concerning the economy.
7. Market Economy
Decision-making in the market economy comes
from the activities of consumers and producers
whose exchanges in the market decide what,
how and for whom. The firms produce goods
and services that are bought by consumers,
creating profit for sellers and firms.
8. Mixed Economy
Almost all countries nowadays do not fit in any of
the first three systems. These countries are mixed
economies that promotes the “invisible hand” of
the market exchanges but at the same time the
government plays an important role in regulating
the market and providing needed goods and
services.
