Chapter 2: The Market System and the Circular Flow Economic System Particular set of institutional arrangements and a coordinating mechanism; used to respond to the economizing problem The Command System (Socialism/Communism) Government owns most property resources and economic decision-making occurs through a central economic plan Mostly gov?t-owned business firms produce according to gov?t directives Gov?t-appointed central planning board makes most decisions a/b resource use, composition and distribution of output, and production organization The Market System (Capitalism) Characterized by private ownership of resources and the use of markets and prices to coordinate and direct economic activity; economic decision-making is widely dispersed; market is the primary force