Essay On Economic System

ASSIGNMNET ON ECONOMIC SYSTEM

By
Santosh Mehta bba – b
20103009800

Economic System
It is the system of production, distribution and consumption of goods and services in the society.
TYPES OF ECONOMIC SYSTEM
• capitalism
• Socialism
• Mixed economy

Capitalism
An economic system based on private ownership and its main motive is to earn profit.
Features of Capitalism:
The principal features of capitalism are discussed below.
(1) Private Property:
The property which is generally ownered privately and he can use it in any manner he likes.
(2) Profit Motive:
The main motive in capitalism is that to make maximum profit.
(3) Price Mechanism:
In this price is generally decided by the company and it is not controlled by authorities so that they can make huge profit.

(4) Consumers’ Sovereignty:
Under this the consumer are free to buy any product according to its taste and preference.
(5) Freedom of Enterprise:
It means that there is free choice of occupation for everyone.
(6) Competition:
It is the important feature of capitalism. It ensures the existence of large number of buyers and sellers in the market. It is competition among buyers and sellers that determines the production, consumption and distribution of goods and services.
(7) use of advanced technology
Under capitalism we are using advanced technology to produce better products than earlier.

Merits of Capitalism:
(1) Increase in Production:
Capitalism helps in improvement of production and increases productivity. It also increases income, saving, and investment, and to progress.
(2) Quality Products at Low Costs:
It also helps to make better quality products in low cost only.
(3) Progress and Prosperity:
Competition under capitalism leads to increase in ef...

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...ixed economy is to maximise social welfare.
Merits of Mixed Economy
(1)Economic stability and proper allocation of resources : Through economic planning the resources of the economy are utilized in the more efficient and optimal manner
(2)Advantages of free initiative and enterprise : In a mixed economy the various capitalistic institutions such as private property, competition, profit motive and freedom of enterprise, etc.,
(3)Preservation of freedoms : A mixed economy is based on democratic principles. It does not suppress the civil, cultural, political or economic freedoms of its members.
Demerits of india’s mixed economy
1. Undue emphasis on the growth of the public sector
2. Inefficiency of both the sectors
3. Ineffective control of the private sectors
4. Economic fluctuations
5. Failure to solve unemployment and inflation
6. Extensive and corrupt bureaucracy