Answers to questions about economic systems

1. Why is there no change in traditional system?

   There is typically no change in a traditional economic system because economic activities are based on long-standing customs, traditions, and beliefs. These societies often prioritize stability and continuity over innovation or growth. Change is often viewed with suspicion or resistance, as it could disrupt the established social and economic order.

2. Who makes the basic decision in command system?

   In a command economic system, the government or a central authority makes the basic economic decisions. This includes decisions about what goods and services to produce, how to produce them, and how to distribute them among the population. The central authority controls the means of production and directs economic activity according to a centrally planned economy.

3. How do you understand that interaction of consumers and producers makes market system work?

   The interaction of consumers and producers is the foundation of a market system. Consumers express their needs and wants through demand, signaling to producers what to supply. Producers, in turn, respond by offering goods and services that meet consumer demand. This interaction is driven by supply and demand, where prices act as signals that guide resource allocation. Competition among producers encourages efficiency and innovation, while consumer choice drives producers to meet their preferences.

4. How do economists evaluate people's standard of living?

   Economists evaluate people's standard of living using a variety of indicators, as mentioned in the text, a society's standard of living is one way to evaluate an economic system. The standard of living is a measure of how well the people live. It depends on the amount and kind of goods and services the people of a country enjoy, or their income. Other factors include income, access to healthcare, education, housing, and other essential goods and services. They also consider factors like life expectancy, infant mortality rates, and environmental quality. These indicators provide a comprehensive picture of the overall well-being and quality of life in a particular society.