Benefits & Drawbacks of Economy - Essay Example

Benefits & Drawbacks of Mixed Economy A mixed economy seems to possess the characteristics of both the planned as well as market economies therefore it also possesses the benefits and drawbacks of both the systems. One of the most important benefits of mixed economy is the fact that it is regulated both by government as well as market forces therefore it is flexible as well as more reliable economic system. Secondly, government, due to its magnitude and influence, is considered as better placed to solve the core problems an economic system has to solve i.e. what to produce, how to produce, whom to produce etc.

however, an element of central planning within mixed economies does not ensure proper and efficient utilization of resources of the economy therefore mixed economies have the biggest drawback of not allocating resources in the most efficient way.Benefits & Drawbacks of Market EconomyOne of the most important benefits of market economy is the fact that it allows buyers and sellers to interact with each other and let their interaction i.e. market forces determine the value of such transactions.

Due to this factor, competition between firms to attract buyers lead to efficiency as firms engage into innovativeness activities to produce goods and services which satisfy the market conditions. (Ollman). However, on the other side, market an economic system can result into serious exploitation of workers by making them to work longer by paying them less. Further, since firms do not pay workers enough to buy goods and services as households therefore there are chances of overproduction.Works Cited1.

Ollman, Bertell. "Market Economy: Advantages and Disadvantages." 1999. New York University. 14 January 2009 .