Introduction A system is a network of parts which interlock to form an overall pattern. An economic

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A system is a network of parts which interlock to form an overall pattern. An economic system is a pattern of organisation which is aimed at solving the three central questions discussed in the previous sections. Economic systems do not always work well, but they are often so vast and complicated that it is quiet marvellous that they work at all. Mohr & Fourie.(2008. P42).
Scarcity is the fundamental challenge confronting all individuals and nations. We cannot always get what we want that is why we have to prioritize and allocate our limited income, time, and resources. Societies have developed different broad economic approaches to manage their resources. Economists generally recognized four basic types of economic systems,
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Economic activity is usually secondary to religious and cultural values and the desire to perpetuate the status quo. (Mohr& Fourie(2008;26-34). Important aspects of economic behaviour are still governed by the traditional system. Some children still follow in their parents’ footsteps. In wealthy families status and tradition are still important.
The command system
In command system the participants are instructed what to produce and how to produce and how to produce it by a central authority which also determines how the output is distributed. Because the economy is governed and coordinated by central authority, command system are also called centrally planned systems. Central planning is a tremendous task; decisions have to be taken on how, where and for what purpose every natural resource, every labourer and every capital good are to be applied. Planners can be wrong about future needs, and they do not provide people with many choices. Command economies are often described as socialists or communist systems. Although central planning has been used mostly in socialists or command systems, central planning is not synonymous with socialism or communism. Central planning refers to the way in which economic activity is co-ordinated, while socialism and communism refer to the ownership of factors of production. Command systems are characterized not only by central planning but also by state ownership of all goods, services
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