An economic system is the system of produsing,distributing and sharing goods within a society.The economic system is made of people and establishments,including their relationships to productive resources.
The main economic problem which all economic systems try to solve is known as "Scarcity",which means we all face limitation,so we all have to make choices as we can't get what we want.However,societies have developed different broad economic approaches to manage their resources.Economists generally recognize three basic types of economic systems;free market,command and mixed economy.
In a free market economy(or market economy),decisions are made by private individual and firms.Resources are allocated through the interaction of free and self directed market forces,this means what to produce is determined my consumers,how to produce is determined by producers and for whom to produce is determined by the purchasing power of the consumers.However,nationand state government play a minor role;their role is to make sure that the market is stable enough to carry out its economic activities right i.e. 81.6% of the UK economy is free while 78.7% of Canada's economy is free.