Forms of Economy

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1. Market Economy
A market economy is one in which individuals and private firms make the major decisions about production and consumption. This is also called a laissez-faire economy. In other words, a laissez-faire economy is one in which the government keeps its hands off economic decisions.

2. Command Economy
A command economy is one in which the government makes all important decisions about production and distribution.

3. Mixed Economy
No society falls completely into either of these extreme forms of economy. Rather, all societies are mixed economies, with elements of market and command.