In which economic system are the answers to the basic economic questions determined by custom?

In which economic system are the answers to the basic economic questions determined by custom?

Traditional economies rely on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it. In a centrally planned economy the central government makes all decisions about the production and consumption of goods and services.

What type of economic system exists when individuals answer the three basic economic questions?

Chapter 2 Review

A	B
Traditional Economy	An economy based on custom and tradition.
Command Economy	An economy that relies on government officials to answer the three basic economic questions.
Market Economy	Individuals answer the three basic economic questions.
Market	The free exchange of goods and services.

Who answers the basic economic questions in a mixed economy?

A mixed economy combines elements of tradi- tional, market, and command economic models to answer the three basic economic questions. In these economies the government owns or controls nearly all the factors of production.

What types of exchanges are shown in the circular flow model?

The circular flow model shows the interaction between two groups of economic decision-makers—households and businesses—and two types of economic markets—the market for resources and the market for goods and services.

What are the basic economic question?

In order to meet the needs of its people, every society must answer three basic economic questions: What should we produce? How should we produce it? For whom should we produce it?

In which economic system do individuals answer the basic economic questions quizlet?

In a mixed economy that is based on this, individuals own the factors and answers the basic economics questions.

What type of economy is illustrated by the circular flow above?

The circular flow model of the economy distills the idea outlined above and shows the flow of money and goods and services in a capitalist economy.

How does a command economic system answer the three economic questions?

In its purest form, a market economy answers the three economic questions by allocating resources and goods through markets, where prices are generated. In its purest form, a command economy answers the three economic questions by making allocation decisions centrally by the government.

What are the basic economic systems?

Economic systems can be categorized into four main types: traditional economies, command economies, mixed economies, and market economies.

How is the circular flow model used in economics?

One of the main basic models taught in economics is the circular-flow model, which describes the flow of money and products throughout the economy in a very simplified way. The model represents all of the actors in an economy as either households or firms (companies), and it divides markets into two categories: Markets for goods and services

Which is the most basic model of Economics?

One of the main basic models taught in economics is the circular-flow model, which describes the flow of money and products throughout the economy in a very simplified way.

Who are the actors in the circular flow model?

The model represents all of the actors in an economy as either households or firms (companies), and it divides markets into two categories: Remember, a market is just a place where buyers and sellers come together to generate economic activity.

How does money flow in goods and services markets?

Goods and Services Markets. In goods and services markets, households buy finished products from firms that are looking to sell what they make. In this transaction, money flows from households to firms, and this is represented by the direction of the arrows on the lines labeled “$$$$” that are connected to the “Goods and Services Markets” box.