DECA+ Business Management and Administration Practice Exam

What is a defining feature of a traditional economy?

1. Production based on advanced technology

2. People produce only what they must have to exist

3. A focus on global trade

4. Ownership of resources by private individuals

The correct answer is: People produce only what they must have to exist

A traditional economy is characterized primarily by subsistence production, where people create goods and services primarily for their own consumption rather than for sale in a market. This system relies heavily on agricultural practices and relies on customs, traditions, and bartering rather than monetary transactions. The emphasis is on producing only what is necessary for survival, which aligns perfectly with the idea that individuals produce only what they must have to exist. This way of organizing economic activity is often found in rural or indigenous communities where the economy is less influenced by external market forces. In contrast, the other options presented describe features of different types of economies. Advanced technology is more characteristic of a modern or industrial economy, which focuses on efficiency and mass production. A focus on global trade is typical of global or market economies where production and exchange occur across borders to maximize efficiency and profit. Lastly, ownership of resources by private individuals is a defining feature of capitalism, where individuals or companies own and control resources for profit, which is not a characteristic of traditional economies that operate within communal or inherited structures.