In which economic system are production decisions largely based on habit or ritual?

• A. Command Economy
• B. Market Economy
• C. Traditional Economy
• D. Mixed Economy

Answer: (C)

In a traditional economy, decisions about what to produce, how to produce it, and for whom are guided by long-standing customs and rituals. Production revolves around the needs and practices of the community, with roles often passed down through generations and methods preserved through habit. Food, goods, and services are typically produced for subsistence or local exchange, using familiar techniques and little incentive for rapid change or innovation. This contrasts with other systems: a command economy relies on government directives, a market economy relies on prices and consumer demand, and a mixed economy blends elements of both, but none are driven primarily by tradition in the way a traditional economy is.