Download Free market economies, Mixed economy and economy

A free market is a market economy based on supply and
demand with little or no government control
 A command economy is a system where the government,
rather than the free market, determines what goods
should be produced, how much should be produced and
the price at which the goods will be offered for sale
 A mixed economic system allows a level of private
economic freedom in the use of capital, but also allows
for governments to interfere in economic activities in order
to achieve social aims
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Adam Smith is often known as the world's first freemarket capitalist.
The Invisible Hand- Adam Smith assumed that
consumers choose for the lowest price, and that
entrepreneurs choose for the highest rate of profit. He
asserted that by thus making their excess or
insufficient demand known through market prices,
consumers "directed" entrepreneurs' investment
money to the most profitable industry. Leading to the
maximisation of human economic wellbeing as a
aim.
“It is not from the benevolence of the butcher, the
brewer, or the baker that we expect our dinner, but
from their regard to their own interest.”
Friedrich von Hayek received the Nobel
Prize in Economic Sciences (jointly) in 1974
for his pioneering work in the theory of
money and economic fluctuations and for
a analysis of the interdependence of
economic, social and institutional
phenomena.
 “I do not think it is an exaggeration to say
history is largely a history of inflation, usually
inflations engineered by governments for
the gain of governments.”
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Marxism is an understanding of the
nature of social relationships which you
are expected to evaluate.
 Recognise that it has strengths and
weakness as a tool of understanding of
our culture.
 “The bourgeoisie is just as necessary a
precondition for the socialist revolution
as is the proletariat itself.”
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Competition between firms will lead to firms
wanting to produce as efficiently as they
want prices to be as low as possible so that
consumers will want to buy from them
 Goods, which are being demanded by
consumers will be produced, and those
that are not in demand will be dropped
 A greater variety in goods for consumers
 People have incentives to produce and
work hard
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Consumers may choose to buy goods that are
not so good for them at the expense of
goods/services which they should be buying.
Society suffers as whole in these circumstances
as workers become less productive.
As profit is the incentive for firms, they may try
to reduce their costs in an underhand or
unethical manner by polluting the
environment, exploiting workers
Goods and services that are not profitable will
not be produced and result in market failure
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Command economies enable the government
to overcome market failure, inequality and
create a society that maximises social welfare
rather than maximises profit.
Command economies can prevent mass
unemployment, often a feature of capitalist
economies.
Command economies could produce goods
which benefit society and ensure everyone has
access to basic necessities.
Command economies help to increase
equality by reducing the wealth gap.
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The needs of the society are often ignored for the betterment of
the economy. Workers are not given options on where they can
be employed or where they can move
The black market explodes in a command economy. Due to the
governmental restrictions, good and services that are not
offered in the command economy begin being offered on the
black market
The amounts of goods being produced are not balanced. One
item will be mass produced whereas another will not have
enough to support the economic needs
The needs of the consumers are often not obtained, so rationing
can then become a way of life within a command economy.
Exporting goods becomes problematic because it is difficult for
the controlling entity to determine which products and prices will
be most successful within the global market
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In mixed market systems most of the decisions
are made by market forces as the market is
highly efficient at quickly responding to
consumer preferences yet the state regulates
the market to try and attempt to prevent
market failure. The state also makes decisions
on behalf of society such as military spending,
public education and public healthcare.