Economics System - Essay Example

Download file to see previous pages They ensure that the limited resources are prioritised and allocated accordingly. In a traditional economic system, society takes precedence over individual interests. Resources are shared equally and individuals work together. Australia is a region that uses this type of system, among the aboriginal communities. In the mixed economic system, most decisions are made by individuals in the market. The United States is an example of a nation that uses this system. In market economies, decisions on the economic standing of a region are made by individuals. The interaction of people and organizations determines how resources are allocated, for example, Brazil. In the command economic system, the government is in charge of the economic status of the region. The distribution and allocation of resources is determined by the state (Myers 2012, p. 83). Socialism is the perfect type of such a system, an example being Cuba. Free market economy A free market system is an economic system in which the state’s government does not interfere with businesses. The exchange of goods and services between individuals is voluntary. ...
All factors of production are owned privately. Mixed economic systems on the other hand have regulations that need to be followed. There are price guidelines stipulated by major parties that control the movement of goods and services in the economy (Ertuna 2012, p. 76). The basic principle that surrounds this system is that the means of production are carried out by private owners as well as government agencies. Self-interests run the objectives of free markets, but they do respond to the needs of the consumers in the market. Mixed markets have the opposite objective as they aim to give everyone; consumers, the government, and even workers, what they work for in the region. No price mechanism runs the mixed economic system as with the free market system. Things change from time to time, but it is often done for the overall good of all individuals (Cowie & Ison 2010, p. 37). The free market system advocates for prices that only benefit privately run resources in the economy, which sometimes weighs on the poorer individuals in the region. How free market economy is more effective than mixed economy The free market system is believed to be more effective than the mixed economic system because more players are involved in the economy. This is because all that is offered through a free market system comes from all around the world. The free market pricing system makes the availability of goods and services from all around the world a welcome phenomenon. Entrepreneurs and business minds are given the largest scope and opportunity to risk their capital in a bid to offer resources that satisfy the needs of consumers (Cowie & Ison 2010, p. 48). ...Download file to see next pages Read More