NAME: Osuji Emmanuel .N.

TOPIC: ASSIGNMENT
COURSE CODE: LIT 205
DEPARTMENT : P.M.T

1).What determines the type of economic system a society operates

1. Ideology: The ideological beliefs of a society heavily influence its economic system. For
example, capitalism emphasizes private ownership and free markets, while socialism focuses
on collective ownership and social welfare.

2. Government Role: The extent of government intervention in the economy is a crucial

factor. Some systems, like laissez-faire capitalism, limit government involvement, while
others, such as command economies, involve extensive state control.

3. Resource Allocation: The method of allocating resources affects the economic system. In
market economies, prices and supply-demand dynamics determine resource distribution. In
planned economies, central authorities make allocation decisions.

4. Property Rights: The recognition and enforcement of property rights shape economic
systems. Systems with strong property rights, like capitalism, incentivize investment and
entrepreneurship. Systems with collective ownership, like communism, prioritize communal
interests.

5. Cultural Factors: Societal values, norms, and traditions also influence economic systems.
Cultural attitudes towards work, wealth accumulation, and social equality can shape the type
of system preferred by a society.

6. Historical Context: Historical events and circumstances, such as revolutions, wars, or

economic crises, can shape the development of economic systems. These events often lead
to shifts in power structures and ideologies.

LIST AND DISCUSS THE BASIC ECONOMIC SYSTEM

A). Capitalist Economy: Also known as capitalism or a free market economy, this system
relies on private ownership and decentralized decision-making. Prices are determined by
supply and demand, and individuals and businesses make choices based on self-interest.
Competition drives efficiency and innovation. Governments in market economies typically
play a role in regulation and ensuring fair competition.

B). Command Economy: In a command economy, also known as socialism or communism, the
government has centralized control over economic decisions and resource allocation. The
state owns or controls key industries, and production quotas are set by the government.
Prices may be determined by the state or heavily regulated. The aim is to prioritize social
welfare and reduce inequalities.

C). Mixed Economy: A mixed economy combines elements of both market and command
economies. It allows private ownership and market forces to operate, but also involves
government intervention to address market failures, provide public goods, and ensure social
welfare. Most modern economies, including those of the United States, Canada, and
European countries, are mixed economies.