Compare the differences between Traditional, Command, Market, and Mixed Economies.
Answers
Answer:
A traditional economy, as the name suggests, is based on a traditional approach. These economies are based on ancient rules and are the most basic type of economy. The focus in a traditional economy is only on the goods and services that match their customs, beliefs, and history.
A command economy is the opposite of a free market economy. In a command economy system, there is one centralized power, which in most cases is the government. So the government makes all decisions regarding the economy. It will decide which goods and services will be produced, in what quantities. The price will also be determined by such centralized power and not by market forces.
This is the complete opposite of a command economy. A free market economy relies entirely on the free market and free market trends. There is no involvement or interference from the government or any such controlling power. This means there are no rules or regulations imposed on either buyers or sellers. The entire economy is determined by the participants of the economy and the laws of demand and supply.
A mixed economy is a perfect marriage between a command economy and a free market economy. So, by and large, the economy is free of government intervention. But the government will regulate and oversee specific sensitive areas of the economy like transportation, public services, defence etc. Such an economy is known as a dual economy. The best examples of such a mixed economy are India and France.