Types of economic system


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Economic System intro

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Types of economic system

  1. 1. TYPES OF ECONOMIC SYSTEM <ul><li>It is based totally on the Price System . This means that the allocation of all resources is based on the Market Price for those resources. </li></ul><ul><li>People are free to spend their money, however, their want and goods and services go to those who are prepared to pay the Highest Price . </li></ul><ul><li>By deciding to buy certain products, consumer decide what is to be produced. </li></ul><ul><li>The method of production will be determined by competition between producers, the most efficient will be able to have lower cost of production, and will therefore be able to sell the product cheaper. </li></ul>MARKET ECONOMIES
  2. 2. MARKET ECONOMIES <ul><li>Gives consumers Freedom of choice. </li></ul><ul><li>Works automatically, not requiring complex administration. </li></ul><ul><li>Encourages individual initiative. </li></ul><ul><li>Only those with money are able to get the full benefit of the system. </li></ul><ul><li>Only profitable goods are produced (no social goods or services would be provided). </li></ul><ul><li>Resources may be wasted. </li></ul><ul><li>Monopoly may develop. </li></ul><ul><li>Welfare may be neglected by businessmen making maximum profit. </li></ul>ADVANTAGES DISADVANTAGES