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 : Presillyn Tan Jie Yin, Fairview International School .
recent update :
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Economic system
written by Presillyn Tan ✈
Economic System
a)
Market Economy
The first form of
economic system is market economy (also known as capitalist economy, free
enterprise economy or laissez-faire system). In practice, market economy is a
system where all the economics decisions are based on the actions of market
participants (buyers and sellers) without participation and active intervention
from central government. What and how much to produce is determined by price
mechanism and market force. Countries that adopt the capitalist economic system
are developed countries like USA, Japan, and some Europe countries. The advantages and disadvantages of market
economy are:
|
Advantages
|
Disadvantages
|
|
High standard of living.
|
Uneven
distribution of wealth.
|
|
Intense competition provides quality and low price goods.
|
Profit oriented
society.
|
|
Greater choice of products.
|
Exploits on
people who cannot compete.
|
b)
Socialist Economy
Socialist economy is
another form of economic system that exists today. It is also known as
centrally planned system or command system. The concept of socialism is
developed in the early of 1800s as a description of a hypothetical economic
system to be contrasted with the predominant market-based economic system. In
socialism system, the allocation of resources is determined by government only.
It is an economic system that based on individuals’ goodwill toward others and
not on their own self interest. Moreover, society decides what, how, and for
whom to produce. Countries that pursue this type of economic system are former
Soviet Union, Cuba, China, North Korea, and so on. The pros and cons of
socialist are:
|
Advantages
|
Disadvantages
|
|
Equal distribution of wealth.
|
Low standard of
living.
|
|
Need-oriented rather than profit-oriented production.
|
Residents are not
motivated to work.
|
|
No socioeconomic classes.
|
Government may make the wrong decisions.
|
c)
Mixed Economy
The third form of
economic system is mixed economy, an economic system that is made up of
capitalism and socialism. This hybrid form of economic system is comprised of both
private and public sectors. Hence, the allocation of resources in society is
partially determined by the market forces and partially determined by the
government. The mixed economic system is
designed to overcome the defects of both the capitalist and socialist system.
Countries that practice the mixed economic system include Malaysia, Thailand,
Taiwan, South Korea and so on. The advantages and disadvantages of mixed
economy include:
|
Advantages
|
Disadvantages
|
|
Provides fair competition.
|
Unnecessary
government interference.
|
|
Optimum utilization of national resources.
|
Bureaucratic decisions
making process.
|
|
Market prices are well regulated.
|
Government monopolies.
|
|
Economic system
written on Sunday, January 13, 2013 @ 3:09 PM ✈
Economic System
a)
Market Economy
The first form of
economic system is market economy (also known as capitalist economy, free
enterprise economy or laissez-faire system). In practice, market economy is a
system where all the economics decisions are based on the actions of market
participants (buyers and sellers) without participation and active intervention
from central government. What and how much to produce is determined by price
mechanism and market force. Countries that adopt the capitalist economic system
are developed countries like USA, Japan, and some Europe countries. The advantages and disadvantages of market
economy are:
|
Advantages
|
Disadvantages
|
|
High standard of living.
|
Uneven
distribution of wealth.
|
|
Intense competition provides quality and low price goods.
|
Profit oriented
society.
|
|
Greater choice of products.
|
Exploits on
people who cannot compete.
|
b)
Socialist Economy
Socialist economy is
another form of economic system that exists today. It is also known as
centrally planned system or command system. The concept of socialism is
developed in the early of 1800s as a description of a hypothetical economic
system to be contrasted with the predominant market-based economic system. In
socialism system, the allocation of resources is determined by government only.
It is an economic system that based on individuals’ goodwill toward others and
not on their own self interest. Moreover, society decides what, how, and for
whom to produce. Countries that pursue this type of economic system are former
Soviet Union, Cuba, China, North Korea, and so on. The pros and cons of
socialist are:
|
Advantages
|
Disadvantages
|
|
Equal distribution of wealth.
|
Low standard of
living.
|
|
Need-oriented rather than profit-oriented production.
|
Residents are not
motivated to work.
|
|
No socioeconomic classes.
|
Government may make the wrong decisions.
|
c)
Mixed Economy
The third form of
economic system is mixed economy, an economic system that is made up of
capitalism and socialism. This hybrid form of economic system is comprised of both
private and public sectors. Hence, the allocation of resources in society is
partially determined by the market forces and partially determined by the
government. The mixed economic system is
designed to overcome the defects of both the capitalist and socialist system.
Countries that practice the mixed economic system include Malaysia, Thailand,
Taiwan, South Korea and so on. The advantages and disadvantages of mixed
economy include:
|
Advantages
|
Disadvantages
|
|
Provides fair competition.
|
Unnecessary
government interference.
|
|
Optimum utilization of national resources.
|
Bureaucratic decisions
making process.
|
|
Market prices are well regulated.
|
Government monopolies.
|
|
