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Market Systems Overview for Students

The document discusses different types of market systems: free market, planned economy, and mixed economy. [1] A free market has no government involvement and private ownership of resources, but may allow for monopolies and lack social services. [2] A planned economy has state ownership and control of everything by the government. [3] A mixed economy combines elements of free enterprise and state control over some industries.

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240 views9 pages

Market Systems Overview for Students

The document discusses different types of market systems: free market, planned economy, and mixed economy. [1] A free market has no government involvement and private ownership of resources, but may allow for monopolies and lack social services. [2] A planned economy has state ownership and control of everything by the government. [3] A mixed economy combines elements of free enterprise and state control over some industries.

Uploaded by

axeem1
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

[Link].

uk

Market Systems
Aim – What are the different types of market system?
Outcomes –
Identify the key features of each system
Compare the key features of different market system
Create a report judging the merits and problems of each
system
Free market economy

• All resources are owned & controlled by


private individuals
• There is NO Government & Taxes
• Consumers decide on what should be produced
by what they buy
• Resources are distributed through the price
mechanism
• All firms aim to maximise their profits
There are no examples of free market
economies in the World
Advantages.
• Consumers are free to choose what they want
to buy.
• Workers are encouraged to work hard as they
can keep most or all of their incomes because
of low or non-existent taxes.
• Businesses compete with each other and this
could keep prices low.
• New businesses are encouraged to set up in
order to make profits – profit maximisation
Disadvantages.
• No services, such as health and education
services, available to everybody, only bought
by those who can afford it!
• No government planning = many uncontrolled
booms or recessions in the economy.
• Businesses might be encouraged to create
MONOPOLIES in order to increase prices.
Consumers would have limited choice.
• Everyone operates with their own self
interest
Planned Economy

• Everything is decided by the


Government
• Resources are owned by the State
• The Government controls all businesses

Very few examples in the World today


Advantages
• Government decides what should be
produced, how much and for whom
• Decreases inequalities
Mixed Economy
• A mixture of free enterprise & state
controlled
• Some resources owned by the State and
some by private individuals
• Businesses make decisions & the
Government try to influence and control
some areas such as Taxes & Laws.
Advantages.

• Government control should eliminate any


waste resulting from competition
between firms.
• There should be work for everybody.
• The needs of the population are met,
but there is little production of luxury
goods for the wealthy.
Disadvantages.
• There is less incentive to work as the
government fixes wages and private
property is not allowed.
• The government may not produce goods
which people want to buy.
• The lack of a profit motive for firms
leads to low efficiency.

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