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

The mixed market economy and the allocation of resources.

Extracts from this document...

Introduction

Anna Markmann 26.10.03 The mixed market economy and the allocation of resources Essay Outline A Introduction: 10% * Economics: Basics - problems, consequences * Short definition of a planned/command economy * Characteristics of a planned/command economy: No class conflict (marx) public ownership, planned production, scarce resources allocated by the government no private property, no self interest in profit, no competition, fixed supply, no choice B Main Body: 75% I Positive features (Theory) (Webnote #113, 109:) further social goals=individual goals/ "state looks after you" * Equal (re-)distribution of wealth and income / employment * Current spending: social welfare, government employees, defence, education, health, pensions, debt repayments * Capital spending: Infrastructure: airports, housing, road&rail, schools, telecommunications * Provision of essential services, law and order, cultural affairs, international relations, social issues = no abuse of monopoly powers * (quick) Economic Growth (from a poor background) * Trade * FOP mobility because of government's help + "effective" use of FOPs = no unemployment, no inflation * stable prices, advertising and currency: government determines price, not determine by constantly changing/insecure market powers; government controls incentives and determines their use = no lack of public/essential goods & equally advantageous for all people II Negative features (Reality) ...read more.

Middle

It contains the features of the market economy and the command economy. Resources are allocated by markets which set prices by a mechanism, called "the invisible hand" by the first economist Adam Smith (1723 - 1790), and government actions. In the market economy everything is based upon the idea of self interest in private property and strong motivation for private profit. Moreover there exists competition, and one has freedom of choice and enterprise. The role of government is limited to the price determination by supply and demand , which my point proves: The price mechanism is a process or a system of determination of prices and resource allocation. It operates in a free market only by the interaction of supply (blue line) and demand (red line): diagram 12:market price quantity These are the driving forces of the market economy and they are constantly changing because of changes in prices of substitute and complementary goods, incomes, tastes, advertising, technology, weather, etc. The law of supply is that, while other things remaining the same, the quantity supplied will increase as the price increases. The actual amount supplied will be finally determined, by the equilibrium, which depends on the amount demanded as well as what suppliers are willing to produce. ...read more.

Conclusion

all people gets absolutely the same amount of goods and services and unemployment does not exists . On the contrary, in the market economy the decision what, from whom and how much to choose belongs to the consumer, that is why the market is able to responds more quickly to new conditions, and the price system improves allocation effectiveness and guides to economic growth. It operates off of profit and loss. Resources follow profits and profits attract competition which leads to more advantages for both sides5. Governments try address then this process using regulations, taxes, and spending. Many resource allocation decisions are best made through markets, but some resource allocation decisions are better addressed using the "dictatorial" powers of government, because sometimes free markets fail to allocate adequately. The mixed market is, to sum up, definitely a question of ratio between command features and market features. Although it is not perfect, it contains more important advantages for consumers and sellers. As well as it uses resources in a way that generates the highest value of output as determent in the market by consumer, called economic efficiency, because it uses the main advantages from allocations of non-market and market mechanisms. 1 Definition by Alan Glanville "Economics from a global perspective" p. 625 2 Webnote #116 from economics.isdedu.de 3 Webnote #116 from economics.isdedu.de 4 Source: http://www.bized.ac.uk/stafsup/options/notes/econ2_c.htm 5 Webnote #101 from economics.isdedu.de 1 ...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. Free essay

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

    However, in a transition economy, the wealthy benefit greatly and their income increases, but the majority of society, who are not as wealthy, will not benefit and their income will decrease and thus, the GDP per capita will drop and the wealth gap increases.

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

    However this, in a command economy, is not possible, because there is no chance for competition, as it focuses more on the equality of the people. There are various factors that make up this economy that distinguish it from the former.

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

    influence on what is produced and therefore the goods the poor want or more likely need will be under produced. However in a command economy it is possible that the state will provide benefits for people who can't work and keep the unemployed out of poverty.

  2. Main characteristics of free market economy

    of the work force was unemployed. When transition economies undergo "Price Liberalization", there is a move from fixed price mechanism to a free price system where the prices of the goods and services will be determined by the supply and demand for the good.

  1. The mixed market economy.

    supply curve S, which meet at the equilibrium e1, this is the market price of the good. The price mechanism, shown in diagram 1, responds to the demand of the consumers (D) and the self-interest of the supplier (S). Through this meeting of demand and supply at e1, not only

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    Another motivation theorist was Frederick Herzberg. He came up with the two-factor theory of motivators and hygiene factors. He said motivators gives the workers job satisfaction and hygiene factors caused the worker to become dissatisfied because they didn't motivate the individual. Motivators Hygiene Factors * Achievement Pay * Responsibility Company policies * Promotion Relationships * Advancement

  1. Retailing In India - A Government Policy Perspective

    FDI Policy India has one of the most transparent and liberal FDI regimes among the emerging and developing economies. By FDI regime we mean those restrictions that apply to foreign nationals and entities but not to Indian nationals and Indian owned entities.

  2. Biography of Adam Smith.

    The larger the corporation and the "freer" the market, the greater the corporation's ability to force others to bear its costs and thereby subsidize its profits. Some call this theft. Economists call it "economies of scale." Neva Goodwin, ecological economist, head of the Global Development and Environment Institute at Tufts University, and an advocate of cost internalization, puts it bluntly.

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