What is economic system?

Solution

Economic System: It is necessary to know about the economic system prevailing in a country in order to understand the economic environment. Economic system influences the freedom or openness of business. Economic system is mainly of three kinds:

(i) Socialistic Economic System: Under this system, business is directed and controlled by the government. In other words, individuals have no freedom to run business,

(ii) Capitalistic Economic System: Under this system, private ownership of business is given importance. Hence, business gets extended.

(iii) Mixed Economic System: Under this system, business is owned both by the government and individuals.

Some More Questions From Business Environment Chapter

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Business Environment

What is economic system?

Some More Questions From Business Environment Chapter

How is business environment helpful in the ‘improvement of performance’?

How ‘first mover advantage’ is made available by the business environment? Give an example.

Explain ‘Dynamic nature’ and ‘Uncertainty’ as features of Business Environment.

Business environment includes both 'specific and general forces'. List any four specific forces.

Why is business environment known as ‘totality of external forces’?

‘Nothing can be said with any amount of certainty about the factors of the business environment.’ Why?

Is the effect of various factors of business environment on business can be recognised separately?

Explain ‘Relativity’ as one of the characteristics of business environment.

'The understanding of business environment helps the managers to identify threats'. What is meant by 'threats' here?

'The understanding of Business Environment enables the firm to identify opportunities'. What is meant by ‘opportunities’ here?

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