L 7 economic system

1. Shifali Garg
MBA

2.  An economy refers to an organization
through which people earn their livelihood.
 An economic system refers to those norms
and rules or institutions which direct an
economy and govern economic relationships
among people in an economy.
 The norms and principles are called
institutions.

3.  It refers to that economic system in which
factors of production are privately owned
and profit motive is the guiding principle of
all production activities.
 It is also called free Market economy
because under it producers, sellers
,buyers,employees,employers,consumers
etc. enjoy legal freedom to enter any
occupation or agreement.
 Eg: england ,Japan,America etc.

4.  Private property
 Price mechanism
 freedom of enterprise
 competition
 profit motive
 sovereignty of consumer
 Labour as a commodity

5.  Rich variety of goods and services
 proper use of resources
 Inducement to work
 efficient production
 Increase in the standard of living
 automatic Mechanism
 Growth of entrepreneurship
 economic freedom

6.  Unequal distribution of Wealth
 class struggle
 Exploitation of labour
 wasteful competition
 Business Fluctuations and Unemployment
 Disregard of public welfare
 Lack of Coordination

7.  The economy is controlled by government
and it directly intervenes in economic
activities.
 Eg: China,Vietnam,Cuba etc.
 Main economic activities are regulated and
controlled by the government in the interest
of social well-being.

8.  Social or collective ownership
 Set objectives
 Economic planning
 Government control
 Lack of competition
 Social welfare
 Limited private sector

9.  Best utilization of Economic Resources
 Better solution to Basic problems
 No wasteful Advertisement
 No cyclical Fluctuations
 Rapid and Balanced Economic Development
 No class struggle and Exploitation of Labour
 Equitable distribution of Income
 Better equipped for economic crises

10.  No proper Basis of cost calculation
 End of Consumer`s sovereignty
 Difficulty in Implementation of Plan
 No Importance to personal efficiency and
productivity
 Lack of freedom
 Veil of secrecy
 Less initiative

11.  Mixed economy is that economy in which
both government and private individuals
exercise control over economic activities.

12.  Coexistence of Private and public sector
 Planned economy and Government control
 Private property and Economic equality
 price mechanism and Regulated economy
 Profit motive and social welfare

13.  Economic freedom and Capital formation
 Competition and Efficient production
 Efficient allocation of Resources
 Advantages of planning
 Economic equality
 Freedom from exploitation

14.  Uncertainty
 Partial government control
 Lack of efficiency
 Corruption
 Constrained growth of private sector
 Black Money
 Misuse of Appropriate resources