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

In the market economy, people can choose products that they want through supply and demand, but in the command economy, people loses their freedom to choose what they want because the government decides what to produce by estimating what people want. However, it is very difficult to estimate what people want; Therefore, people would not be satisfied with what they get. Comparing the two economies, the market economy will produce new technologies because in order for different firms to make more profit they need newer better/newer products. 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.

The government provides the people with health care, education etc. etc. The mixed economy tries to obtain the advantages of both market and command economy by letting people to choose freely on their wants and prevents as minimal problems as possible. These problems include unemployment, inequalities of wealth, pollution, social problems etc.etc. Unemployment is prevented by the people controlling the economy but this would mean that no profits would be made and would result in laziness. That's why the government gives everyone a minimum standard of living so that workers who work less would only receive the minimum amount and workers who work harder might get a higher salary. If there is unemployment the government may be able to create jobs for those who are unemployed by employing them in their own offices and factories or by helping private firms to provide jobs. 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