A traditional economy relies on which of the following to decide production and consumption?

• A. Market signals
• B. Habit, custom, or ritual
• C. Government planning
• D. Global trade

Answer: (B)

In a traditional economy, decisions about what to produce and consume are guided by long-standing patterns of behavior—the community’s habit, custom, or ritual. These societies rely on customs that assign roles and determine resource use, often aiming for subsistence and local needs rather than profit. Production follows what has historically been done, and consumption aligns with social norms and reciprocity within the community. Market signals, government planning, and global trade don’t drive these choices, which is why habit, custom, or ritual best explains how production and consumption are decided.