The main types of economic system are: 

1. Socialistic/Centrally Planned Economy 

2. Capitalistic/Market Economy and. 

3. Mixed Economy. 

1. Centrally Planned Economy or Socialistic Economy: A planned economy also called as socialistic.economy is that economy where the economic activities are controlled by the central Government. Here, the Government takes decisions about the allocation of resources in accordance with objectives to attain economic and social welfare. Example, Russia, China, North Korea etc. Here, the basic economic problems are solved as follows:

Government takes decisions about the allocation of resources in accordance with the predetermined goals and objectives to attain maximum social welfare. Government decides what to produce, how to produce and what prices are to be fixed.

• Regarding what to produce, the Government may produce those goods and services which are most useful for its society. 
• Regarding how to produce, the most suitable technique in production is adopted whether labour intensive or capital intensive in accordance with the situation in the economy. 
• Regarding for whom to produce, the goods and services are produced with the welfare of people who are suffering from hunger in mind even though there may be a loss.
•  It gives importance to the quality of life rather than quantity of production. 
• It focuses the resources on rapid economic development.

2. Market Economy: A Market Economy also known as Capitalistic Economy is that economy in which the economic decisions are undertaken on the basis of market mechanism by the private entrepreneurs. It functions on demand and supply conditions. In USA, Japan, Australia, UK and other countries we can see Market Economic systems.

In Market Economy, private individuals own the factors of production. Here, the profit is the main goal of business. There is the least intervention of Government.

Price mechanism plays a major role in Market Economy. It is a balancing wheel of the market mechanism. Prices coordinate decisions of the producers and consumers. The price is determined by demand and supply in the market. No individual organization or Government is responsible for the production and distribution or pricing of goods. All depend on market mechanism.

Regarding basic problems of an economy, the problem of what to produce is solved on the basis of demand and profit. The producers produce those products which bring more income.

The problem of how the goods are to be produced is determined by the competition among different entrepreneurs. They select least cost effective combination of technologies so that they can get more returns for their investment.

In Market Economy, the problem of for whom to produce is decided on the basis of the purchasing power of the consumers. The producers produce commodities for the rich who can afford to pay more but poorer sections of the society are neglected.

In Market Economy, profits and losses play a predominant role in the growth and development of every producer.

3. Mixed Economy: A mixed economy is that economy in which we can see coexistence of both private and public sector enterprises. It is the combination of Socialistic and Capitalistic features. The best example is India.

In a mixed economic system, the resources are owned by both the Government and Private individuals. Here, some areas of economic activities are totally governed by the Government and other sectors are open to the private sector.

The Government involves in those activities which promote maximum social and economic welfare without any profit motive. The Private sector functions with the intention of maximizing profits. Here we find dual pricing system. For example, the supply of rice through Government Fair Price shops is low when compared to the private provision stores.

In this type of economy, the Government takes the responsibility to run certain essential sectors like Railways, Printing of currency notes, Atomic energy, public parks etc. Here, the basic problems are solved both by Public and Private Sectors.

Regarding what to produce, consumers play the main role. But, the Government also interferes by imposing tax or giving subsidy. The problem of how to produce, the private sector will decide the best cost effective technology to maximize profits and public sector will select the technology on the basis of composition of resources. The problem of for whom to produce depends on both the purchasing’power of the consumers and the Government policy towards weaker sections of the society.