A particular set of institutional arrangements and coordinating mechanism - to respond to the economizing problem.

Determines what goods are produced, how they are produced, who gets them, how to accommodate change, and how to promote technological progress.

a.  who owns the factors of production.

b.  the method used to motivate, coordinate, and direct economic activity.

Also known as socialism or communism.

Government owns most  property resources and economic decision making occurs through a central economic plan.

A central planning board makes all decisions.