An economic system refers to which concept?

• A. The way a government collects taxes
• B. The legal framework for property rights
• C. The way a society organizes the production, distribution and consumption of goods and services
• D. The behavior of consumers in markets

Answer: (C)

An economic system is about how a society organizes the production, distribution, and consumption of goods and services. It describes who decides what to produce, how resources are allocated, and how goods and services get to people. That’s why this choice is the best fit: it captures the whole structure of economic activity, from producers to consumers and everything in between. The other ideas—how the government collects taxes, the legal framework for property rights, or how consumers behave in markets—are important factors or mechanisms within an economy, but they don’t define the system as a whole. For example, market, planned, and mixed economies differ mainly in how decisions about what to produce and how to allocate resources are made, which is exactly what the economic system describes.