The smallest, most local type of economy is a

A market economy

B traditional economy

C mixed economy

D command economy

Command economy (most typically in the form of Communism) can be found in whole countries - this is rather big scale and not local.

The same is true for market economy (which is actually not really found, as most market economies are in reality mixed-economies).

So the correct answer is B - traditional economies! A traditional economy is when a villager exchanges goods with another villager.

Traditional Economy is the smallest and the most local type of Economic System. This type of economy has the most traditions and is the most ancient making it the original economic system. This type of economy is often use in rural and farms.