Presentation1
Types of economic system
KET ECONOMY
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Production decisions are based on market forces
Business and individuals are free to buy and sell
No or little government intervention
Price is determined by changes in demand and supply
Market economy
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Price cannot be affected by a single firm or consumer Economy is more of like a perfect competition market
Examples of market economies in history:
England/Great Britain during the Industrial
Revolution.
The U.S. during the Industrial Revolution.
Market economy
Command economy
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All the decisions are made by the government
All the businesses are state owned
Appoints a team of planners who lays down a plan Production takes according to the central plan
Price is also set by the government leaving consumers with no choice
Motive is availability of resources to everyone
It is a kind of monopoly situation
Command economy Examples in history: .
The Soviet
Union under
Joseph Stalin.
China under
Mao Zedong
Cuba under
Fidel Castro
.
Command economy
Market vs. Command
MARKET
Planning is done by
COMMAND
government
Motive is wellbeing of the society
Limited choice for consumers Planning is done by individuals
Motive is self interest
Wide range of option and variety for consumers Market vs. Command
MARKET
COMMAND
A huge competition due to free trade
No competition due to trade barriers
High Quality of products
Poor Quality of products Innovation takes place
No Innovation
Market vs. Command
MARKET
All the resources are privately owned
Resources are available in the market but due to high price, not affordable by some groups COMMAND
Resources and factors of production are owned by the government
People may have money to spend, but no resource in the market Market vs. Command
MARKET
Resources are allocated on the basis of plan laid down
Have been a success in many nations like
US
COMMAND
Resource
KET ECONOMY
•
•
•
•
Production decisions are based on market forces
Business and individuals are free to buy and sell
No or little government intervention
Price is determined by changes in demand and supply
Market economy
•
•
•
Price cannot be affected by a single firm or consumer Economy is more of like a perfect competition market
Examples of market economies in history:
England/Great Britain during the Industrial
Revolution.
The U.S. during the Industrial Revolution.
Market economy
Command economy
•
•
•
•
•
•
•
All the decisions are made by the government
All the businesses are state owned
Appoints a team of planners who lays down a plan Production takes according to the central plan
Price is also set by the government leaving consumers with no choice
Motive is availability of resources to everyone
It is a kind of monopoly situation
Command economy Examples in history: .
The Soviet
Union under
Joseph Stalin.
China under
Mao Zedong
Cuba under
Fidel Castro
.
Command economy
Market vs. Command
MARKET
Planning is done by
COMMAND
government
Motive is wellbeing of the society
Limited choice for consumers Planning is done by individuals
Motive is self interest
Wide range of option and variety for consumers Market vs. Command
MARKET
COMMAND
A huge competition due to free trade
No competition due to trade barriers
High Quality of products
Poor Quality of products Innovation takes place
No Innovation
Market vs. Command
MARKET
All the resources are privately owned
Resources are available in the market but due to high price, not affordable by some groups COMMAND
Resources and factors of production are owned by the government
People may have money to spend, but no resource in the market Market vs. Command
MARKET
Resources are allocated on the basis of plan laid down
Have been a success in many nations like
US
COMMAND
Resource