We have what is called a traditional economy which involves hunting and gathering, basic sustenance farming, herding cattle etc. This type of economy is in very short supply in today’s world. The two basic forms of modern economy are the market economy or capitalism in which a free exchange of goods happens with the government intervention. We also have the planned economy in which the Government has total control over the means of distribution, such as Communism and Socialism. Most economies are mixed economy which is a combination of planned and market economy. Planned and Market economy is not complex. In every situation, if you have something that is scarce, you have to figure out a way of distributing this resource. Scarcity exists when not enough of a commodity is available to satisfy all of the wants at a zero price. When this happens economies usually ration. This is a way of rationing resources. A rationing system is just a way of distributing or who gets what. In the free market prices indicate this. In the planned economy it will be the Government to decide.