What type of economic system typically makes decisions based on past traditions and customs?

The type of economic system that makes decisions based on past traditions and customs is known as a traditional economy. In this framework, economic activities are primarily determined by cultural practices and historical precedents rather than by market forces or government directives. This can often involve subsistence farming, barter systems, and community-based resource management, where the methods of production and distribution have been passed down through generations.

In a traditional economy, decisions about what to produce, how to produce it, and for whom to produce are heavily influenced by the customs and beliefs of the community. This adherence to tradition ensures that the economic practices remain stable and predictable but may also result in limited adaptability to changing circumstances or innovations.

Conversely, command economies operate under centralized authority, market economies are driven by supply and demand, and mixed economies incorporate elements of both command and market systems. Each of these alternatives relies on different principles and mechanisms for decision-making, distinguishing them from the foundational characteristics of a traditional economy.