Three Major Economic Systems
Economic Systems Theory Assignment
Economic Systems
1. Identify the three major economic systems.
Command Economy is when the government is in control of the economy about what to produce, how to produce and for whom to produce. The government allocates the resources and decides all the factors of production. Private business will either be banned or make an agreement with the government.
Market Economy is the government does not affect any decisions that individual businesses make. The decisions of allocating limited resources are made by private businesses and people. Profit is the motive of producing and running the business.Government only makes the basic laws such as laws that ensure humanity and fairness. Price is determined by market demand and supply.
Mixed Economy is the mixture of market and command economy. It has a private and public sector. The government will set up basic laws that regulates the private businesses. People are motivated by profit.The government layout legal and illegal terms to ensure the fairness in the market. …show more content…
Describe a pure centrally planned economy, and identify its problems.
A pure centrally planned economy has a central authority to make all the decision on distributing the scarce resources.The price and supply of the markets are controlled by the central authority. The drawback of a pure centrally planned economy is that it does not yield multifarious products. Consumers are unable to choose the products and companies might be inefficient since they are not driven by profit.
5. Compare mixed, transitional, and traditional economies.
Mixed Economy is an economic system which combines elements from Planned economic system and Free Market Economic system. The market has a certain amount of power to decide price and allocating of resources. The government will set up certain laws to prevent acts that are harmful to the consumers, such as monopoly. The government and free market have the same goals to maximize economic
Economic Systems
1. Identify the three major economic systems.
Command Economy is when the government is in control of the economy about what to produce, how to produce and for whom to produce. The government allocates the resources and decides all the factors of production. Private business will either be banned or make an agreement with the government.
Market Economy is the government does not affect any decisions that individual businesses make. The decisions of allocating limited resources are made by private businesses and people. Profit is the motive of producing and running the business.Government only makes the basic laws such as laws that ensure humanity and fairness. Price is determined by market demand and supply.
Mixed Economy is the mixture of market and command economy. It has a private and public sector. The government will set up basic laws that regulates the private businesses. People are motivated by profit.The government layout legal and illegal terms to ensure the fairness in the market. …show more content…
Describe a pure centrally planned economy, and identify its problems.
A pure centrally planned economy has a central authority to make all the decision on distributing the scarce resources.The price and supply of the markets are controlled by the central authority. The drawback of a pure centrally planned economy is that it does not yield multifarious products. Consumers are unable to choose the products and companies might be inefficient since they are not driven by profit.
5. Compare mixed, transitional, and traditional economies.
Mixed Economy is an economic system which combines elements from Planned economic system and Free Market Economic system. The market has a certain amount of power to decide price and allocating of resources. The government will set up certain laws to prevent acts that are harmful to the consumers, such as monopoly. The government and free market have the same goals to maximize economic