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:pencil2:Chapter 13 Market economic system (Disadvantages (Income and…
:pencil2:Chapter 13
Market economic system
MARKET ECONOMY
An economy in which the force of demand and supply determine price
Little to no government intervention
MIXED ECONOMY
As its name suggests, this economic system is a combination of the planned and market economic system
With some resources being owned and controlled by private individuals and firms
PLANNED ECONOMY
Relies on the government (public sector)
Associated with a communist political
system that strives for social equality
Ex: North Korea, Venezuela
Advantages
EFFICIENCY
Profit is the main motivator
Better products at a lower price
Many firm compete to provide the best product
Freedom of choice
Individuals can choose which goods and services to purchase
INCENTIVES
The profit motive for firms and the possibility for individuals to earn unlimited wealth create incentives to work hard
Disadvantages
Wasteful competition
Competitive pressures can mean that firms use up unnecessary resources
Social hardship
The absence of government control means that public goods
Ex: street lighting, public roads
Income and Wealth inequalities
The wealthy stay wealthy and Laws favor them
people can have unlimited money
Enviromental Issues
Lead to more pollution and use of resources
Cutting down forests
Drilling oil
Smoke factories
:smiley:
