Individual assignment

ECO2210
ECONOMIC PRINCIPLES AND ISSUE

Course code : ECO2210
Section : 8AC1
Title : Individual Assignment 1
Student’s name : Beng Putra
Student I/D : I12001388
Lecture’s name : MR SEYED MOHAMAD MEHDI TASALOTI
Date of submissions : 23/09/2013

Year: 2013/2014
TABLE OF CONTENT
1. INTRODUCTION 3 1.0. DEFINITION 3 1.1. ECONOMIC QUESTION PROBLEM ALL ECONOMIC FACE 4 1.2. FACTOR OF PRODUCTION OF ECONOMY SYSTEM 5 1.3. THE FUNCTION OF FOUR QUESTION OF THE ECONOMIC SYSTEM 7 1.4. THERE HAVE 5 MAIN TYPES OF ECONOMIC SYSTEM 8
2. CONTENT 9 2.1. THE GENERAL ESSENTIAL CHARATERISTIC OF MIXED ECONOMY 10 2.2. THERE ARE 5 CHARATERISTIC OF FEATURES OF MIXED ECONOMY 11 2.3. OWNERSHIP OF RESOURCES OF THE MIXED ECONOMY 12 2.4. ALLOCATION RESOURCE OF MIXED ECONOMY SYSTEM 13 2.5. ROLE GOVERNMENT OF MIXED ECONOMY SYSTEM 14
2.6. GOALS AND POLICES SYSTEM OF MIXED ECONOMY SYSTEM 15

2.7. ADVANTAGES OF MIXED ECONOMY 15 2.8. DISADVANTAGES OF MIXED ECONOMY 17
3.0. CONCLUSION 17 REFERENCES LIST 18

1.0 DEFINITION
Economy system is a blend of the rules or ways into a single unit and used to achieve economy with objectively. To cover the purpose entire processing and society action in effort to need reach their necessary. It refers to the role or model of distribution and production which take place in the society.
1.1. ECONOMIC QUESTION PROBLEM ALL ECONOMIC FACE

We must make Choice about:

We choose 5 economy systems with determine which are:

Scarcity is a perpetual problem facing society due to limited resources and unlimited wants and needs satisfied with these resources. Scarcity means that society does not have enough of everything resources for everyone wants and needs (anualweb, n.d).

Two Components
Consider the two sides of the scarcity problem:
1. Unlimited Wants are this is a basic characteristic of humanity which means that people are never totally satisfied with the quantity and variety of goods and services. It means that people never get enough, that there is always something else that they would want or need.
2. Limited Resources: This is a basic condition of nature which means that the quantities of available resources used for production are limited. It means that the economy has only so many resources that can be used AT ANY GIVEN TIME. Time to produce other goods and services.

1.2. FACTOR OF PRODUCTION OF ECONOMY SYSTEM
1. Land – All the natural resources on the land, in addition to the land itself. Any improvements people have made to the land.
2. Labor – The mental and physical efforts of human workers. The process of making things requires labor.
3. Capital – Human-made resources used to make products or deliver services. Capital has 2 kinds of production:
1. Physical capital – all the tools, machines, and other equipment a business needs.
2. Human capital – the skills and knowledge of a company’s workers.

4. Entrepreneurship – A person who starts and manages a business. they take a risk by investing money in a new business in the hope of earning a profit. Without entrepreneurship, the other resources cannot be used efficiently and productively.

1.3. THE FUNCTION OF FOUR QUESTION OF THE ECONOMIC SYSTEM:
1. What to produce Goods and services?
To deciding what goods and services are to be produced and in what quantity. This involves the allocating of scarce resources in relation to the composition of total output in the economy. It is to see that goods and service and produced in accordance with the availability of resources and in what quantity and thus, allocation of resources depend upon the administration.
2. How to produce Goods and Services?
To deciding how to produce goods and services with what combinations and what method of production. This method is primarily dependent upon the available resources within the economy. It deals with utilizing the most efficient process to produce the goods and services.
3. for whom to produce goods and services?
To deciding about distribution of goods and services produced in their final form and determined through needs of individual through their contribution towards the production process.
4. How to should be distribution goods and services? (Additional point)
Depending on distributor which economic process making such as goods and services call production. How producers to distribute which goods and services are produces to consumers to making consume become prosperous.
1.4. THERE HAVE 5 MAIN TYPES OF ECONOMIC SYSTEM:
1. Traditional Economy system: a system where tradition customs and society beliefs shape the goods of products with creates by them. Where the Countries that use this type of economic system are at rural and farm-based or in old era.
2. Market Economy system: a system where the people decided made through the market mechanism which the forces of demand and supply, without any government, interference, determine how resources are allocated as called free enterprise or free market.
3. Command Economy system: a system where the government makes decision all economic market, production, and allocated to consumers. This is a great deal of planning economies tend to be run by the government, in theory , the government want to see greater economic equality between consumers.
4. Mixed Economy system: a System where some goods and services are produced in the free-market sector of the economy, but others are produced by the state or government.
5. Islamic Economy system: an economic systems where people studies the economic problems of filled with the values of Islamic.
2.0. DEFINITION OF MIXED ECONOMY
A "mixed" economy is a mix between socialism and capitalism. Mixed economy is a system economy mix between market economy and a centralized system, which the government and the private sector interact in solving economic problems by combination. The capitalist system and the socialist system which took middle line between freedom and control that means absolute line between the role of state and individual prominent role. A mixed economy occurs when both the private sector and the state direct the economy. Many countries follow this economic structure. Countries that have a mixed economic system include the United States of America, United Kingdom, Australia, Japan, Germany, Canada, Italy, South Africa, Slovenia, Mexico and Malaysia even in Indonesia also using this mixed economy structure. Three questions of a mixed economy system:

2.1. THE GENERAL ESSENTIAL OF CHARATERISTIC OF MIXED ECONOMY:
1. The means of production are owned and controlled by private sector as well as the government.
2. The people decides on economy activities within the economy
3. The combination of the best features of capitalist and command economies are observable in the market
4. The problem of distribution goods and services, allocation of economic resources are determined through a combination of the market and governmental laws and policies .

2.2. THERE ARE 5 CHARATERISTIC OF FEATURES OF MIXED ECONOMY
1) Public sector: all decision regarding what, how and for whom to produce is taken by the state. Public utilities such as road construction, power supply, water supply are in the side of public sector. These public utilities are operating for societal welfare maximization not for profit motives.
2) Private sector: There is private sector in which production and distribution of goods and services are carried out by private enterprise. Profit motive is the guiding principle in this sector.
3) Joint sector: there is joint sector where both state and private jointly run enterprise. It is organized on the basis of a joint stock company where majority of shares are held by the state.
4) Freedom and control: in mixed economy there is every freedom to own private property, earn profit, to consume, produce, distribute and to have any occupation of choice without limitations until unless such possessions have an adverse effect on public welfare so that state intervenes in order to control and regulate the situation.
5) Economic planning: There is a central planning authority in a mixed economy. In this system, economy operates on basis of some economic plan. All sectors of economy function in accordance with the objectives, priority and targets laid down in the plan.
2.3. OWNERSHIP OF RESOURCES OF THE MIXED ECONOMY:
Private ownership of land and capital is an important element of the free enterprise system and the essential features of a mixed economy. Under an independent company, individuals are free to own property and carry out their own work. A mixed economy defends capitalist economic elements but also allows some government ownership of industry. Private ownership rates and free enterprise differ across different economic mix. U.S. emphasizes free enterprise while other countries nationalize certain industries, such as utilities, transportation and energy. Moreover, business personal property in a mixed economy may be required to comply with various government regulations. Even communist China 's economy includes a number of features that suggest that the market can be considered as a mixed economy; albeit one that retains many of the features of the socialist planned economy. Watch the Website Economic eyes that the Chinese government reforms have resulted private business in the manufacturing and services sectors (ehowco, n.d).

2.4. ALLOCATION RESOURCE OF MIXED ECONOMY SYSTEM
In a mixed economic system with combining the government’s plan to use the free market. An important feature of a mixed economic system and that the private issuer that has ownership of the resources, as well as free market, they have the freedom to determine the allocation of their resources. In order to produce, determine the production of goods and services to produce based on price signals with the ultimate goal to maximize the benefits of how much. However, mixed economic system, with the goods, they are different from the free market economic system with some scarce to produce services that thinks their country into the public sector and the government, people, and need to be willing. And products and services are goods and services, as examples of goods and services as a public benefit and injection defense and education, and street lighting. By controlling the use of certain resources and ownerships, high unemployment, when the national government, that to build a factory to create jobs for people to use the resources you can. Furthermore, it is possible to provide services or goods to the poor governments do not have the ability to pay needs to use its resources (Economicgrumble, 2012).

2.5. ROLE GOVERNMENT OF MIXED ECONOMY SYSTEM
In a mixed economy, the governments besides public sector play an important role in the economic life of the state through the revenue and expenditure measures of its budget. The important functions are:
(i) Allocation function:
Government provides public goods such as defense, public administration, and other that different from personal belonging. These items cannot be delivered through in market mechanism. But, it is necessary for the user and so the government has given them. The Government has allocated resources among the personal belongings and public goods.
(ii) Distribution function:
Through taxes and government spending affect the basic personal income distribution house in a fair way. So, their taxes will be the rich and shop for projects that benefit poorer.
(iii) Stabilization function
The country 's economy is affected by economic fluctuations, such as depression and explosion conditions. The changes are, virtues and other hazards. This is required by the government policy measures that can affect the fit in this case, the overall level of demand. It 's called the actions and measures to stabilize. The purpose of this step is to avoid the conditions of unemployment and inflation.
2.6. GOALS AND POLICES SYSTEM OF MIXED ECONOMY SYSTEM
A basic level is the pursuit of economic to purpose mixed economy by using different basis. There have 5 basics to aim such as: a public, full employment, stability, economic growth, efficiency and fair. Governments bear the primary responsibility, pursuing 5 objectives of economic policy to help: the user, control and regulate voluntary exchange market. Elected officials, government agencies set up, management and law through Congress, the decision of the court to the actions taken by the rule: take the basic form (amosweb, n.d).
2.7. ADVENTAGES OF MIXED ECONOMY:
In mixed economy, both the government and the private sector jointly control the economic structure. There are numerous advantages of a mixed economy.
1. Provide fair competition: with the presence of private companies to ensure that there has fair competition in the market, the quality of products and services are not interrupted.
2. The market price arranged with both the Government and the regulatory bodies which ensure that market price does not exceed the actual price.
3. Optimal utilization of national resources In a mixed economy, resources are used as efficiently as well the government and private companies take advantage of them.
4. People were given more powers: People generally have more say when it comes to quality, the price of products and services.
5. A mixed economy system is not allowed a totally monopoly: prevent a few sector, mixed economy does not allowed monopoly because government and private company to enter any business sector.
Mixed economy is helping to increase national production. Both public and private sectors are working hard to bring more production. Problems created by free enterprise and public control too much solved through a mixed economy. It gives company the freedom of ownership of productive social welfare benefits and political freedom. All national resources are used in a mixed economy.(blurtit , n.d).
2.8. DISADVETAGES OF MIXED ECONOMY:
1. Government within several the case of very influential in the economy, engineering change policy interest rates, taxes and the money supply in an effort to reach the target.
2. In several countries the economy is driven by the private sector, with those who are responsible for overall economic growth, at a time of instability, and because changes in their respective markets, unemployment, inflation and recession.
3. Some sectors of the economy operating as a monopoly, whether they are run privately or by the government. It monopoly stand a greater risk of being inefficient, which could result in higher prices for consumers. 4. This economic system can be difficult to know how much the government should intervene, for example, discretionary fiscal policy can create problems such alternative government loans. 5. Mixed economy which was criticized by the Socialist to let market forces too much, causing imbalances and inefficient allocation of resources. Mixed economy is a half-way house. This does not help in achieving optimal use of national resources. Mixed economy suffers from a lack of both capitalism and socialism. Rarely mixed economic progress. It had kept back wardness. In a mixture of different types of economic waste occurs in the economy (blurtit, n.d).
3.0. CONCLUSION In mixed economy, they have advantages and disadvantages of mixed economic which has chance in certain time. Also Mixed economy has goods characteristic that we can produce free market and free sector but in other hands, we still under control by the government about the high taxes that we must do payment it. for defects prevent discrimination and the specific steps can be completed works efficiently in the public sector, to eliminate the shortages. Thus, the private sector can also improve work efficiency, control and direction. By following these steps, fiscal savings and the real economic instability can be removed.

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