This document summarizes the key aspects of different economic systems. It discusses the three basic economic problems of what to produce, how to produce, and for whom to produce. It then describes the four factors of production - land, labor, capital, and entrepreneurship. Finally, it outlines the characteristics of four economic systems: traditional, command, market, and mixed economies.

1. KUVEMPU UNIVERSITY
JNANASAHYADRI, SHANKARAGHATTA
SEMINOR ON
NATURE OF ECONOMIC SYSTEM
GUIDED BY,
DR.ARJUMAND BANU
LECTURER
DEPT. OF ENVIRONMENTAL
SCIENCE
SUBMITTED BY,
DASTAGEER A

2. INTRODUCTION
• An economic system is a mechanism which deals with the production,
distribution and consumption of goods and services in a particular society
and comprises of people, institutions and their relationships.
• It addresses problems like allocation or scarcity of resources.

3. The three basic economic problems
1. what goods and services should be produced and in what quantities?
2. How should these goods and services be produced?
3. For whom should these goods and services be produced?

4. What goods and services to be produced?
• It is not always possible to produce all goods and services that people
want because resources are limited.
• From the available resources can only be produced a limited quantity
of goods and services, and when the maximum combinations of
goods and services that can be produced has been reached, an
increase in the quantity of the said product connotes a decrease in
quantity of another.

5. How should these goods and services be
produced?
• As a rule of thumb, goods and services must be developed or produced at its
optimum level that is maximum output with a minimum input without
sacrificing the quality.
For whom should these goods and services be
produced?
• With this regard to this question, we should think also whose generation will
receive these goods and services the present or the future generation.

6. Four factors of production.
• Land. land is not only the soil for growing Agricultural
Products. it is also the source of all materials and food whether
in liquid, solid, or gaseous form in or above the earth.
• Labour. it refers to human effort, when the effort is rewarded
by some kind of pay. this refers also to the available physical
and mental talents of the people who have to produce goods
and services.

7. • Capital. the word comes from the Latin ‘caput’ which means ‘head’.
it refers to the tangible, physical good that a person or society creates
in the expectation that its use will improve our increase future
production. That is the reason why this term also connotes the
facilities of goods.
• Entrepreneurship. entrepreneurship means that people are
combining the other three factors of production to create some
products or services to sell. They hope for profit but take risk loss or
bankruptcy.

8. Four economic systems or categories.
Traditional economy
• communal land ownership.
• the leader decides on the management of Agricultural production which is the basis of the
economy.
• The production, distribution, and use of economic resources are based in the traditional practices.
• New technologies are not welcomed since they are in contrast with the traditional practices of
their ancestors.
• The economy is only its third priority while culture and religion are its fore most priorities.
• Mines are used to gather raw materials for production.

9. Command economy
• Resource allocation is done by government.
• Presence of Central planning of all economic activities.
• There is no free competition (the government is only seller).
• Only the government plays the role in setting legal Framework for
economic life production and distribution of goods and services.
• The products or needs of the people are distributed based on priorities
set by the committee.

10. Market economy.
• The private sector owns and manages the means of production.
• The price system in a market structure applies to determine how much will be paid for a
certain commodity or service.
• It is also known as laissez faire or free enterprise.
• There is minimum government interference and decisions pertaining to the
management of the economy (protection of the society against internal and external
aggression).
• Existence of competition often results to Monopoly.
• There is presence of economic power.

11. Mixed economy.
• The means of production are owned and controlled by the private sector as
well as the Government.
• The people decide on economic activities within the economy.
• The combinations of the best features of capitalist and command economies
are observable in the market.
• The problem of distribution of goods and services and allocation of economic
resources are determined through a combination of the market and
governmental laws and policies.

12. THE CIRCULAR FLOW OF ECONOMY

13. CONCLUSION
• Poverty, unemployment and inflation are the drastic problems in the
economic of developing countries like India
• To achieve surplus development in the nation, these type of problems
should be eradicated as fast as possible.
• To overcome these problems stubborn economic policies are required.