• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

In a market economy (free-market economy), production, distribution, and exchange are run by private individual firms trying to make profit out of it.

Extracts from this document...

Introduction

In a market economy (free-market economy), production, distribution, and exchange are run by private individual firms trying to make profit out of it. The prices of goods and products are altered by supply and demand. Supply and demand works by the sellers determine the supply. The buyers/consumer determines the demand. In a free competitive market, the price of the product is moved up or down until the amount supplied equals the amount demanded. An example is, if more consumers demand for a certain product, the firms producing the product will increase the price in order to make more profit from it. If the demand for a certain product is decreased, the price would also decrease so that it would still attract customers. In the market economy, the government does little help but provides the country with public goods such as defense, police, street lights, roads, clean environment etc. ...read more.

Middle

In the command economy, the technology would not advance very fast because every gets the same basic essentials meaning no one would work as hard as they could. On the other hand, advantages could still be found in a planned economy for example there would be no unemployment because people control the economy unlike the free-market; Firms in a free-market tries to make as much profit as possible so that jobs would be cut down and replaced by machines of a more advanced technology and salary for workers would not be needed. A mixed economy is a mix of the market economy and the command economy. Resources are mostly owned by private companies in which they manage the production, distribution and exchange of goods and services. In other words, these firms will determine the quantities of goods and services which are produced, and to whom they are distributed to. ...read more.

Conclusion

The government does not estimate the needs and wants of people because they are produced by firms and the prices of goods/services work like the market economy by supply and demand. On conclusion, the mixed economy achieves a more constant economic growth than other economies. A Mixed economy does have disadvantages for example high inflation, high unemployment and low economic growth. High inflation is caused by rise in prices because there is more demand for it. A High unemployment might sometimes be caused because it may not be profitable to employ people. Also, the government collects taxes from people in a mixed economy. The tax is used to pay for public goods and services such as highways, education, health care and clean environment which no firms would be willing to produce because buyers would not be able to afford it. High taxes may also discourage people from working hard when some of the money they earn are taken away by the government. Francesco Chan 10J ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Main characteristics of free market economy

    and makes all the decisions about the use of the resources and the distribution. "Market Socialism" is often used to describe a planned economy in which the "means of production" are owned by the state (public). Public Ownership suggests that in general, the profit of the economy is distributed fairly amongst the population to avoid wealth disparity.

  2. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    Return on Capital Employed Profit before Tax & Interest/Capital Employed Bellway (213,255 / 850051) *100 =25.09% (175,204 / 687108) * 100 = 25.50% (133,055 / 575377) *100 = 23.12% (107,381/ 454931) *100 = 23.60% (95,607 / 390930) *100 =24.46% 6.04 33.7 102.04 Wilson Bowden (279.1/1123)

  1. Free essay

    What are the main characteristics of a free market economy and centrally planned economy?

    Merit goods are usually underprovided in a free-market economy. In contrast to the Planned Economy, there is the 'Free Market', or 'Market Economy', in which there is consumer sovereignty, and the consumer has choices, self-interest, and the ability to own property, and the right to build an industry.

  2. Retailing In India - A Government Policy Perspective

    The takeaway here is that FDI is likely to bring in a whole new set of jobs into the economy and this would go a great way in achieving the government's employment and GDP growth targets. FDI wont kill local players: The Chinese experience has been that even after the

  1. The Mixed Market and the Command/Planned Economy.

    These are extremely positive merits for various reasons. These features of the economy entail that the production of the necessary goods are subsidized by the government. For example, in a mixed market economy, if the cost of delivery for an economic good is high, then the price of the good is higher, because the demand for would be higher than the supply.

  2. Assess the relative merits and demerits of a market economy. Why have each East ...

    In a market economy there may be a variety of goods, but they will also be out of the price range of the poorest in society who don't have the ability to pay for it.

  1. Chinese car market overview. Citroen case study

    and are not likely to survive in an open market There are positive indicators. The financing sector is opening up to foreign firms, allowing affordable finance packages for first-time buyers. In addition to less expensive cars, credit is more available to Chinese consumers.

  2. The Social Balance - The Mixed Economy.

    Indeed, there are strong reasons for arguing that any effect which advertising and emulation exert in favour - private sector growth has been swamped by a variety of other influences in recent years, some affecting all western mixed economies, others applying only or particularly to the United Kingdom.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work