Business is a part of the economic system and operates within the framework of the country’s economic system. Business firms carry out their production and distribution activities according to the nature and type of the country’s economic system which has been adopted to utilize the available resources for meeting the society’s needs. The economic system designed by a nation to utilize her resources for the purpose of satisfying the needs and wants of the people. Economic system embodies the nature of property rights, ownership of resources, market mechanism, role of state etc.

The basic purpose of an economic system is to ensure maximum possible satisfaction for the people of the country. Economic systems differ from country to country according to the nature of economic institution which a country chooses for satisfying the people’s wants. There three main forms of economic systems.