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

Outline the main features of a market economy and compare it to a Command economy.

Extracts from this document...

Introduction

a) Outline the main features of a market economy and compare it to a Command economy. (10) For an economic society to survive there must be an economic system that will allow people to produce goods and services for the consumer. There are three main economic systems in the world today such as the free-market economies; the command economies; and the mixed economies. There are no pure command economies or pure free-market economies in the world today. There are only mixed economies this is because no economy is purely run by the state and no economy has no state intervention. All of these economies face the same basic economic problems and how they answer these problems determines which economy is in use in a society. Theses problems are three questions: what will be produced?; how will they be produced; and who will get what is produced? A free-market economy tries to solve the basic economic problem by allowing free play in the market. This means that the state will have very little interference if any with any economic activity that will occur and that anyone can take part in this economic activity. This system of free play is often described as laissez-faire. ...read more.

Middle

In a command economy the state may make that factory make those toxic fumes safe in a costly process that the factory wouldn't do if it weren't law due to the large costs. Safety again can be another weakness for the public in a free-market economy, when desirable demerit goods, such as alcohol and cigarettes, can be more attractive due to their low cost. These goods can be harmful to consumer whereas merit goods such as education and health services, will help the consumer and have a smaller demand therefore they can be too expensive for many people to afford. Whereas in a command economy the state will tax demerit goods making them less attractive and subsides merit goods making them more affordable or in some cases free. Also in a free-market economy there are no laws on the selling of extremely harmful drugs or other goods such as heroin. These however in a command economy are often illegal and can only be purchased illegally with extreme difficulty on the black market. Also in a free-market economy it can be hard to make consumers pay for services such as defence that they don't directly use and therefore they are not produced. ...read more.

Conclusion

c) What kind of system does the UK have today? Do you think the balance is right? (5) The UK has a mixed economic system. This means that it has some features of a free-market economy and some features of a command economy. One of the features that the UK has that is of a free-market nature is the feature of free enterprise. This means that the British government allows any workers in the UK to work for anyone they want and people are allowed to set up their own companies and produce whatever they want. Another feature of the free-market economy that is present in the UK is that everyone is given the right to private property and within or using that property earn an income. In my opinion the balance isn't right. I believe that the UK should lean more to the command side of its mixed economy. I believe more money should be spent by the state on subsidising merit goods, such as education, health and police to improve them. To do the government should tax more on demerit goods such as alcohol and cigarettes, but especially on goods that damage the environment such as petrol. I also believe that to allow for more money to subsidise merit goods the so-called 'rich' in the UK should be taxed more than they already are. ...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. Peer reviewed

    Explain the main features of the behaviour of firms which operate in an oligopolistic ...

    5 star(s)

    due to the barriers to entry they have out in place through gaining contracts and colluding with smaller firms. The entrance of free view and cable has made the market more contestable but profits are quite often determined though advertising and as sky and free view offer more exclusive channels

  2. Assessment of the market economy system

    So innovation becomes important, just as what president Jiang Zemin says, "Innovation is the first produce force." Figure 1 Besides privatisation, there is another characteristic of market economy system-specialization, which results in much higher productivity than self-sufficiency system. Different degree of specialization may occur between individuals, firms, religions or nations.

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

    * Interest rate Low interest rate will increase demand for houses, which will result in house prices rising. While high interest rate will cause demand to fall back as the economy slows down, stabilising and decreasing house prices. * Uncertainty within the manufacturing sector (Systematic risk)

  2. Features of command economies

    There is no competition between factories because the target of production is determined by state. They don't need to improve their productivity such as technology. What they need to do is just to finish the government's target. Therefore no incentives to efficiency are exist. So the technical progress is stagnant.

  1. The mixed market economy.

    But here again, the government intervenes, the government helps unemployment by creating jobs in their own offices and by helping private firms to provide jobs. "Allocative efficiency means that resources should be allocated to match the wants of society"2. Another definition is "An allocation of resources is efficient if no

  2. Chinese car market overview. Citroen case study

    PROMOTION Chinese specifications China is a complex market and in order to promote properly a foreign product in this country, a lot of criteria should be taken into consideration. First of all, the Chinese level of technology is quite high: nevertheless, there is a lack in terms of communication

  1. The Social Balance - The Mixed Economy.

    Although Professor Galbraith's illustration is drawn from the USA, it is clear from the nature of his explanation of the tendency of the public sector to lag behind the private that this generalisation is intended to apply to all western mixed economies.

  2. In a market economy (free-market economy), production, distribution, and exchange are run by private ...

    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.

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