* 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 income of the labourers|
Information used from http://www.oppapers.com/essays/Market-Vs-Planned-Economy/160245
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Market Economy Effectiveness
The success of the market economy is that the public can have private ownership of a company, “the prices of goods and services are set by the supply and demand of goods and services” http://www.differencebetween.com/difference-between-command-economy-and-vs-market-economy/ , This means that the market is free and there is no other organisation that can intervene with the way it functions. The economic problem
“An economic problem is basically the problem of choice which arises because of scarcity of resources.” http://www.preservearticles.com/201104115229/what-is-an-economic-problem-and-why-does-it-arises.html “The economic problem emerges because our desire for goods and services to consume is greater than our ability to produce those goods and services. The demand for goods and services arises from human wants.” http://faculty.etsu.edu/hipples/ProbSys.htm, these definitions mean that the producers cannot keep up with the demand for goods and services because of the limited amount of resources. The level of per capita income in a market economy is high because the profit of organisations goes towards the economy, the owner/CEO, and the employees. If the income distributed to the workers increases then they are motivated and more productive as they realise the harder they work the more money they make. This can have a major effect on the economy because the more the income earned the more will be spent on goods and services which provides more work for others. The businesses itself supports the economy by spending money on shares and spend more on wants such as new technology and resources to run the company, they also lend money and invest money. The way the Market economy handles the economic problem is by increasing and decreasing the price of...