Market Economy vs Planned Economy

MARKET ECONOMY | PLANNED ECONOMY | * The market economy is not run by a high authority. Instead it is run by many individuals regarding production, consumption and work. * The market is free and prices can be of a wide range * The market economy is intended for a middle/upper class. This is because people can earn as much money as they want, upper class people don’t have to distribute a profit evenly. * The theory of the market economy is to give people the capability to earn as much money as they want and do what they believe is in their best interest e.g. a modern citizen designs a product and keeps 80 % of the profit and leaves the 20% precent of the profit to be evenly spread between the workers. * The market economy doesn’t cater for the poor, the sick, the disabled and the old age people. * The high authority cannot control how much is produced or how much the product will be sold for e.g. companies can produce as much as they like and make as many colours as they like. | * The Market economy is run by a high authority. It is usually the Government e.g. North Korea’s, he/she controls how the economy operates. * The Government makes a decision on the price of goods and services. * The Planned economy is aimed at a lower/middle class. This is because people’s incomes are evenly distributed by the Government so there is a small chance a person can become richer than another. * The theory of the planned economy is to ensure an equal amount of credit is given to everyone that contributes to making the economy greater e.g. companies distributing the credit for producing socks. * The planned economy gives an equal amount of income to everyone which helps the sick, the old, the weak and the disabled * The high authority decides how much is going to be produced, in what way and the amount of profit that given to the labourers e.g. there is a t-shirt company, the government enforces the rules about how many is made, what colour and the