Types of Economic Systems

The second economic system is the market economy. The market economy is a system of supply and demand. They produce and what size is controlled by price mechanism (Ebert/griffin, pg. 11). For example the consumer decides whom he or she wants to buy from and what they will pay for it. In a market system an individual can choose what business they want to do business with or even if they want to operate a business themselves. The last economic system is the mixed market system. The mixed market system can be associated with both the planned and the market economies. A mixed market shows traits from both systems. For example cigarettes can be sold legally but government restricts minors from purchasing the item. (Ebert/griffin, pg 12). There are three major disadvantages of a planned economy. The first is that there is no entrepreneurship. The second is consumers don’t have any input as to what is produced. The last major disadvantage is that there is no spur to improve quality and productivity.
The three main advantages of the Planned economy. First you will always fine sufficient investment growth and always fine equal of wealth and last may encourage the spur of new productivity. Although there are many disadvantages a planned economy does have an advantage. There will always be equal wealth and steady growth of investment.
Reference: Ebert and Griffin, R.W. (2005). Business essentials. Upper Saddle River, NJ: Pearson Prentice Hall

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