Experience Economy

The Experience Economy

Critical Review of Related Literature

Name

Instructor

Course

Date

Introduction

The economic system is the the method in which a country produces distributes and consumes goods and services . An economic system must answer four basic economic questions that will direct a nation 's economic activity (Pride , Hughes and Kapoor , 2010

What goods and services- and how much of each- will be produced

How will these goods and services be produced

For whom will these goods and services be produced

Who owns and who

controls the major factors of production

Four types of economic systems have been formulated and implemented throughout human history . These are : traditional economy , command economy , capitalist /free economy and mixed economy . Traditional economy is based on culture , tradition and rituals . This type of economy , which developed gradually characterized by slow productivity and low rising capital-labor ratios , usually consist of agriculture based societies (Mokyr , 1989

Command economies are economies in which the government owns and controls major factors of production . Also called centrally planned economy , the government decides on all issues regarding labor , mode of production and what goods and services to produce . Socialist and communist societies are examples of command economies . However , most leaders of these forms of government realized that although it was based on the principle of equality , the system was inefficient leading to shortages or surplus of products which usually resulted in political unrest (Taylor , 2007

Capitalist economic system is a system wherein individuals and private enterprises own and operate the...