In a market system, changes in prices cause the shift in resources, from making products that are becoming less popular to making those that are becoming more popular

1. Market
Economic
System
MUDASSIR RAZA

2. Discussion Points
- Define a market economic system
- Explain the difference between private and public sector
- Discuss the advantages and disadvantages of the market economic system
- Recognise how efficiency can be assessed
- Describe the role of market forces in different countries

3. - In a market system, changes in prices cause the shift in
resources, from making products that are becoming less
popular to making those that are becoming more popular

4. Competition and incentives, including higher profits and
higher wages, play key roles in a market system.

5. Private and Public Sector

6. The advantages of market economic system:
The main advantages claimed for a market economy
are that output reflects consumers tastes, consumers
have greater choice, competetion promotes efficiency
which lowers prices and increases quality, and financial
incentives encourage hard work and enterprise.

7. The disadvantages of market economic system:
Among the disadvantages that may arise from
operating a market economy are that output may not
reflects the full costs and benefits, private sector firms
may abuse their market power, resources may be
immobile, products that consumers want, but cannot
be charged for directly, cannot be produced, and there
may be poverty.

8. Allocative Efficiency:
When resources are allocated to produce the right products in the right
quantites.

9. Allocative Inefficiency: under production

10. Allocative Inefficiency: over production

11. Allocative Inefficiency: over production

12. Productive Efficiency
When products are produced at the lowest possible cost and making full
use of resources.

13. Dynamic Efficiency
Efficiency occuring over time as a result of investment and innovation.

14. Examples

15. Happy Learning!