Which of these scenarios best represents a traditional economic system?

• A. A rural community where families farm the same land as their ancestors and trade goods through barter.
• B. A city where businesses compete freely and prices are determined by supply and demand.
• C. A country where the government sets prices and production targets for all major industries.
• D. A region where most economic decisions are made by multinational corporations.

Answer: (A)

Verified step by step guidance

1. Understand the definition of a traditional economic system: it is an economic system where customs, traditions, and beliefs shape the goods and the services the economy produces, as well as the rules and manner of their distribution. Often, this system relies on subsistence farming, hunting, gathering, or barter trade, and economic roles are typically passed down through generations.
2. Analyze each scenario by comparing it to the characteristics of a traditional economic system:
3. 1. A rural community where families farm the same land as their ancestors and trade goods through barter aligns with the traditional system because it relies on inherited practices and barter rather than money.
4. 2. A city where businesses compete freely and prices are determined by supply and demand describes a market economy, not a traditional one.
5. 3. A country where the government sets prices and production targets represents a command economy, which is different from a traditional system.
6. 4. A region where most economic decisions are made by multinational corporations suggests a modern, corporate-driven economy, not a traditional one.