china economy

Advantages &Disadvantages

There are few advantages by change the economy system from Centrally Planned Economy or also known as socialist economy to capitalism or Free Market Economy . Competitions between firms should result in firms wanting to achieve economies of scale produce as efficiently as possible because they want prices to be as low as possible so that consumers will want to buy from them in simple understanding is making more profit by produce some goods. This shows that producer have to use the resources efficiently . Besides that it is also affect the production for goods, which are being demanded by consumers for example consumer wants will be produced, and those that are not in demand will be dropped so more choice for the consumer in terms of what they buy. Well conclusion in doing Free Market Economy is gain profit by follow the regulation in the market system which is follow the demand and the balance or profit from the goods can be use for some other thing for goods.

Since profit is the target or objective for firms or government, they may try to bring down their costs surreptitiously (in an underhand manner) for example by polluting the earth to get more resources(not controlling in logging) , exploiting labours (not protecting them in terms of working hours, health and safety and quality of life - this is a human cost to society).Goods and services that are not giving big profit will not be produced. Commoner communities/citizen have to face it as a result. For example in terms of transport and post.Certain members of society will not be able to work and earn like the elderly, the unemployed (because no firms want their skills because lack of productivity), and the disadvantaged. They will be left and will fall into poverty and bad lifetime (remember if there is no government, they cannot be assist ). Capitalism will produe certain goods and services that difficult to be sold to consumers example chemical weapon, which defend our country (and other defense weapons). Large firms still control certain markets, even where there is competition, and exploit suppliers (by bring their prices down) and consumers (by putting high price to consumers) to maximize profits. TESCO’s dominance in the grocery market is a good example of this.Consumers may choose to buy goods that are not so good for them example unhealthy product, illegal drugs (DEMERIT GOODS) at the expense of goods/services which they should be buying for example dental care, health care, fruit and vegetables, fitness memberships (MERIT GOODS). Society suffers as whole in these circumstances as workers become less productive.
These are goods and services, which the government provides for society as a whole. They are financed out of taxation. Public goods include: education, health, roads, police, refuse clearance, street lighting. The most pure public goods CANNOT be rejected by society as a whole; they are there for everyone and cannot be stopped.