How do traditional economic systems typically answer the basic economic question of what, how, and for whom to produce?

• A. By allowing market forces of supply and demand to determine production and distribution
• B. By relying on customs, traditions, and beliefs passed down through generations
• C. By central government planning and allocation of resources
• D. By random selection and chance

Answer: (B)

Verified step by step guidance

1. Identify the basic economic questions: 'What to produce?', 'How to produce?', and 'For whom to produce?'. These questions address the allocation of scarce resources in any economic system.
2. Understand that traditional economic systems answer these questions based on customs, traditions, and cultural beliefs that have been passed down through generations, rather than through market forces or government planning.
3. Recognize that in traditional systems, production methods and distribution patterns are typically determined by historical precedent and social roles, which means economic activities are often guided by established practices rather than innovation or competition.
4. Contrast this with other economic systems: market economies rely on supply and demand, command economies depend on central planning, and random selection is not a recognized method in economic systems.
5. Conclude that the hallmark of traditional economic systems is their reliance on inherited customs and social norms to decide what goods and services are produced, how they are produced, and who receives them.