Question

Describe how the market system, command system, & circular flow work

Answer 1

Market system- it is the network of all the actors and role players that takes part in the trade of any good or services. These includes buyers, sellers, producers etc.

Command system- unlike free market, in command system, government decides, what quantities of goods should be produced by the producers in moderation, and like this it affects the price indirectly.

Circular flow - circular flow of income and expenditure works when the exchange of land, labour, capital and entrepreneurship takes place between household and firms.