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(Factors of Production for the good of a school desk, Types of economies,…
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Types of economies
Mixed
Mixed economies have aspects of both a free and planned economy. A free market exists for certain commodities, but the government may nationalise certain industries for public service, monopoly prevention, strategic reasons etc.
Planned
Highly nationalised economy where the government controls the means of production of goods. Can foster greater equity in a market, because the same products are available to all, but government corruption may lead to a decrease in quality of life for EVERYONE.
Free market
Low level of government intervention in markets, lax regulations on markets with the philosophy that a free market will produce the highest quality goods at the cheapest price - though they may underprovide public goods and lead to negative externalities, e.g. pollution, income inequality. This can be mitigated to an extent by government regulation, which is a mixed economy.
Supply and Demand
Supply
A graph on the plot product price vs. quantity supplied which shows the quantity of product supplies are willing to sell at a certain price. The greater the price, the greater the incentive to produce and profit which leads to greater supply. Supply is proportional to price.
Demand
A graph on the plot product price vs, quantity demanded which shows the quantity of product consumers are willing to buy at a certain price. The lower the price, the greater the demand, because more consumers are able to afford/are willing to pay the price. Demand is inversely proportional to price.
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Equity, economic growth and efficiency
Equity
Giving all people the same opportunity to profit in the economy, reducing income inequality
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