Advantages And Disadvantages Of Economic Systems

An economic system is the institutions, organisations and methods used to deal with the problems of what kind of goods and services to produce, how and who should receive them that can affect a business, an area even the whole country. It can reflect the values, targets and development degree of a particular area. So, different economic systems are based on different situation of the businesses, areas or countries. However, there are three main kinds of economic systems: planned, market and mixed economy. Firstly, a planned economy is also known as a command economy, which means it can help to coordinate the operation of economic activities by collectivity such as the government controls rather than the free market regulation. This type of an economic system is especially applicable to developing countries because the government can control the production of goods and determine prices, output and wages for labour. It provides the basic demand for people to live. In contrast, in the market economy, market forces that mean the private ownership play the major part in economy activity of demand and supply. The government is at

Before to talk about the shortcomings of the mixed economy, it can be seen that it also contains some weaknesses of the planned economy and market economy. Initially, the resources may not be made full use of them. This is also the denominator of the command economy because limitation of the government. It will reduce the available quantity of the resources and the merchants cannot get the real needs they want. Thus, the supply can be dropped which will influence the whole market or country. Also, because of government intervention, the private business cannot make too much contribution as they want. It is easy to be an obstacle to progress for the government always being the part to control and balance the state of the