1. SOC 311
Economics
Pros and Cons of a Market Economy Unit 2 Assignment
Consider how you take a complex topic and boil it down to easy-to-understand concepts at
school, work, or home. You probably do this for things that interest you, such as sports, fashion,
or popular culture. This assignment allows you to take the concept of a market economy and
break it down into advantages and disadvantages
Directions: Your boss has asked you to fill her in on advantages and disadvantages of a market
economy. Your boss is looking for an excellent report that is not long, but provides information
about market economies. Do your best to show both sides of a market economy to help your
boss decide whether investing a new chain into the system would be an effective idea or not.
Guidelines: Write your summary in 200-300 words. Make sure you have a great introduction to
get your boss interested. Then, figure out a way to best compare and contrast pros and cons of a
market economy. Finally, make sure you wrap up by stating your view, based on the facts, as to
whether your think your boss should try to open up a new store in a market economy. Cite your
sources using MLA formatting.
Steps for Completing Assignment
1. What is a market economy?
a. Provide a definition.
b. Provide an example or two of a country with a market economy.
2. List two to three advantages of a market economy.
3. List two to three disadvantages of a market economy.
4. Compare your lists and wrap up by stating your opinion of whether you think your boss
should open up a new store in a market economy.
.
What is a market economy? Well a market economy is an economic system in
which individuals’ choice and voluntary exchange direct economic decisions. An
example of a market economy is Mexico. According to Economy News in 2008
Mexico’s economy was graded as one of the growing and successful economy of
North America. It was listed on the twelfth position among the top economies of
the world. Mexico economy is a free market economy having its trading
agreements with some big economies like Canada and US.
Key advantages of a market economy are economic and political freedom, and
profit. Economic and political freedom is very important to a market economy
because a market economy requires that people be free to make their own
economic choices. Also, since the government does not have a lot of control on
the economy, the political process can be much freer, with a diversity of
viewpoints. Now profit is a motivation that makes it another key feature of a
market economy. It insures that resources will be allocated efficiently, since
inefficiencies would result in lower profits. It also serves as a reward for hard
workers and innovation.
Even though these advantages are good there are also some disadvantages.
Some disadvantages are it has no mechanism for providing public goods and

2. services and it can not prevent the unequal distribution of wealth. If there are no
mechanisms for providing public goods and services there is also no national
defense, because it would not be profitable from a strictly economic view point.
Also because this will not prevent unequal distribution of wealth this will cause
unequal opportunities.
Over all like any economy a market economy has advantages and
disadvantages. It seems that the advantages over weigh the disadvantages, so
opening a new store in a market economy should work very well.
Works Cited
Dhamija, Neha. "Mexico Economy: A Free Market Economy." 2008. Economy News. 28
February 2011
<http://www.economynews.in/kb/20-01-2009/Mexico_Economy:_A_Free_Market_Econ
omy.html>.
McDougal Littell: Economics Concepts and Choices. Canada, 2008.