Traditional Economic System

From Generation to Generation

Examples: Third World Countries (usually located in Africa, Asia, Latin America, and the Middle East).


  • only produces goods and services which are required for survival
  • no surplus or wastage of resources for unnecessary goods and services
  • defined roles eliminate conflict


  • lower productivity
  • lower development of society
  • lower standard of living
  • resist change
  • restricts specialization

Analysis of the 3 economic questions:

  1. What should be produced: What best ensures its survival.
  2. How should it be produced: The methods of production and distribution should be the same as they always have been which are determined by custom and tradition.
  3. For whom will it be produced: Traditional families and social units