Tawhid Azam
ID: 2511868
Course: DST603 (Hunger, Poverty and
Development in Market Economies)
Instructor: DR. Mohammed Abu Eusuf
Department of Social Sciences & Humanities
Topic: Explain basic economic system of an economic society.
Exploration: Society is a group of people who live together in a community and share common
rules, values, and ways of life. They may speak the same language, follow similar traditions, and
work together to fulfill their needs. It includes families, schools, governments, cultures, and
everything that helps people live and grow together.
An economic system is the way a society organizes its resources to produce goods and services
and distribute them to people. Every society, whether small or large, needs to make choices
about how to use their limited resources. These choices form the basis of the economic system of
a society.
Every economic system tries to work on three basic questions:
[Link] to produce?
[Link] to produce?
[Link] whom to produce?
What to produce: A society has to decide which goods and services are most needed. Should it
focus on food, housing, education, or technology?
How to produce: This refers to how goods and services will be created. Should people do the
work by hand or use machines? Should production happen in cities or villages?
For whom to produce: Once goods are produced, the system decides who will receive them.
Will everyone get the same amount? Or will it depend on income, need, or social class?
There are four main types of economic systems:
[Link] Economy: In this system, people follow customs and traditions. Work is usually
based on family roles, and production is mostly for survival. People often trade goods instead of
using money.
Example: Some tribal or rural communities.
2. Command Economy: Here, the government controls all major decisions. It decides what will
be produced, how, and who gets it. There is little or no private ownership.
Example: North Korea.
3. Market Economy: This system is based on supply and demand. People and businesses decide
what to produce and sell. Prices are set in markets, and businesses compete to make profits.
Example: The United States (mostly market-based).
4. Mixed Economy: A mixed economy combines both private business and government control.
Most countries today follow this model. The government runs key services like health and
education, while private companies also operate freely.
Example: India, where both public and private sectors are active.
An economic system affects how people live, work, and meet their needs. It decides what is
available in shops, what kind of jobs people have, how much things cost, and who gets access to
services like healthcare and education.
A good economic system helps reduce poverty, supports fair growth, and uses resources wisely.
No system is perfect, but most countries try to choose a system that balances fairness, freedom,
and development.
In simple words, the economic system of an economic society is the plan or structure it uses to
produce and share goods and services. It helps decide what is needed, how it should be made,
and who will get it. It also works on utilizing everyone of a society to take part in the economy.
Understanding economic systems helps us understand how countries work and how people’s
lives are shaped by the choices their society makes.
