Question

Review the characteristics of the three major types of economies: Free markets, Command markets and Mixed markets.

Which system do you consider to be the most beneficial to the business owner and why? to the consumer and why?

Answer 1

Answer : Free market allows Producer and consumer to act accordingly to the best interest of the producer and consumer.

Characteristics of free market Economy are :

• Less government involvement in an economy.
• Wide variety of goods and services available with the customer.
• Voluntary exchange take place in an economy.
• Incentives for firm to become efficient and cut costs.
• Price are determined by supply and demand.

Command Market :

A command Market Economy is where the centeral government make all decisions .

Characteristics of command Economy are :

• Limited choice available to the consumer.
• Shortage are problem because of poorly run factories.
• Less freedom.
• Price are regulated by the government.
• No competition.
• Business are not meant for earning profit.

Mixed market :

Mixed market Economy consists both Private companies and government owned companies.

Characteristics of mixed market are :

• Government and individual share the decision making process.
• Property is control by both government and private individuals.
• Limited competition
• Manay decisions are taken by privately but there is some government regulation.

From business man point of view Free market Economy is most beneficial for them.There are various reasons associated with it such as :

• Efficiency of a business has been increased.
• Less involvement of the government.
• No price regulation.
• Able to earn maximum profit
• Business man become wealthy .
• Lower cost has been determined

For consumer point of view , Mixed market is the suitable for the consumer because

• Provide government regulation so that business man cannot charge higher price.
• Competition provide quality of the product in the hands of the customer.
• Control of the government is required to eliminate the harassment with workers and consumer by businessman.