StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Introduction to the Economics System - Essay Example

Cite this document
Summary
The essay "Introduction to the Economics System" focuses on the critical analysis of the major issues in the introduction to the economics system. The production, distribution, and allocation of goods and services may define an economic system…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.8% of users find it useful
Introduction to the Economics System
Read Text Preview

Extract of sample "Introduction to the Economics System"

? Economics System Economics System The definition and types of economics systems The production, distribution, and allocation of goods and services may define an economics system. The combination of these sectors makes up the economic structure of different economies. There are four main types of economics systems, namely; the mixed economic system, market economies, command economic systems, and the traditional economic system. They ensure that the limited resources are prioritised and allocated accordingly. In a traditional economic system, society takes precedence over individual interests. Resources are shared equally and individuals work together. Australia is a region that uses this type of system, among the aboriginal communities. In the mixed economic system, most decisions are made by individuals in the market. The United States is an example of a nation that uses this system. In market economies, decisions on the economic standing of a region are made by individuals. The interaction of people and organizations determines how resources are allocated, for example, Brazil. In the command economic system, the government is in charge of the economic status of the region. The distribution and allocation of resources is determined by the state (Myers 2012, p. 83). Socialism is the perfect type of such a system, an example being Cuba. Free market economy A free market system is an economic system in which the state’s government does not interfere with businesses. The exchange of goods and services between individuals is voluntary. Different parties partake in such exchange because they aim to benefit. In this system, exchanges takes place, which may not be a simple concept as each individual may have their own perspective on the value of products or services (Ertuna 2012, p. 68). Furthermore, this system advocates for the use of money as a medium for exchange to occur. It is this medium that facilitates the exchange for another desired commodity. Features of the free market economy and the mixed economics system The free market economy is based on the demand and supply concept. This is where there is little or no regulation from parties that are not concerned with the exchange of goods and services. In this system, all means of production are done by private individuals, with profit-seeking enterprises, who control resources in their possession. All factors of production are owned privately. Mixed economic systems on the other hand have regulations that need to be followed. There are price guidelines stipulated by major parties that control the movement of goods and services in the economy (Ertuna 2012, p. 76). The basic principle that surrounds this system is that the means of production are carried out by private owners as well as government agencies. Self-interests run the objectives of free markets, but they do respond to the needs of the consumers in the market. Mixed markets have the opposite objective as they aim to give everyone; consumers, the government, and even workers, what they work for in the region. No price mechanism runs the mixed economic system as with the free market system. Things change from time to time, but it is often done for the overall good of all individuals (Cowie & Ison 2010, p. 37). The free market system advocates for prices that only benefit privately run resources in the economy, which sometimes weighs on the poorer individuals in the region. How free market economy is more effective than mixed economy The free market system is believed to be more effective than the mixed economic system because more players are involved in the economy. This is because all that is offered through a free market system comes from all around the world. The free market pricing system makes the availability of goods and services from all around the world a welcome phenomenon. Entrepreneurs and business minds are given the largest scope and opportunity to risk their capital in a bid to offer resources that satisfy the needs of consumers (Cowie & Ison 2010, p. 48). Future desires can also be monitored through the free market. The productivity in an economy is increased through free market as compared to a mixed market. This is through savings and investments that are created, which increases the standards of living among all citizens in the region. Free market systems also stimulate and rewards technological growth and development. Innovators in this field get an exceptional head-start in trying to satisfy consumers of their products. This is through innovative creations of their products that are aimed at satisfying consumers, around the world. They spearhead economic growth of their regions differently as they struggle to find a footing in the global market (Cowie & Ison 2010, p. 56). Limitations of free market against the strengths of mixed economy One of the main limitations of a free market system is the privatisation of many firms that seek to benefit their pockets at the expense of citizens. Self-interest in modern times has been the slogan for most players in the economic market. In a mixed economy, government intervention in some instances can assist the citizens of a region curtail some of the powers that individual players in the market may have. The issue of monopoly or the dominance of one organization can be reduced significantly by the government (Kates 2011, p. 98). This may be one of the biggest strengths of the mixed economy. Conclusion and recommendations The free market system is not better or more effective than the mixed economic system. Individuals should not have the autonomy to control the fate and lives of individuals who might work toward making their lives better. In such a system, the richer an individual is, the more they could purchase. It should not be left to these players to determine a region’s economic course. The mixed economic system is probably the solution that could work for economies around the world. Individuals have a right to value the products they need. Government agencies can offer protection against individual firms that are present in the market, for example; from exploitation and greed (Kates 2011, p. 112). References Chrystal, A & Lipsey, R 2011, Economics, Macmillan Publishers, London. Cowie, J & Ison, S 2010, The economics of transport: a theoretical and applied perspective, Routledge, London. Ertuna, OI 2012, Wealth welfare and the global free market: a social audit of capitalist economics, Hart Publishing, New York. Kates, S 2011, Free market economies: an introduction for the general reader, SAGE, London. Myers, D 2012, Economics and property, Bantam Books, New York. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Economics System Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1491956-what-is-econonic-systems-
(Economics System Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/macro-microeconomics/1491956-what-is-econonic-systems-.
“Economics System Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1491956-what-is-econonic-systems-.
  • Cited: 0 times

CHECK THESE SAMPLES OF Introduction to the Economics System

Introduction to Basic Economics

The paper "introduction to Basic Economics" highlights that car manufacturers would be unable to reduce their costs of production and they may be driven out of business in the long run by competitors such as Tata Group who recorded a $2,500 low-cost car production.... Government economies rely on involuntary enforcement to allocate resources through the set of rules and laws to govern a resource allocation system.... his alludes to economies such as capitalism, which is a market-oriented economic system, as it uses more of the market than the government in allocating resources....
6 Pages (1500 words) Essay

International Monetary Economics

The whole system has to be reformed with much consideration of current international economics.... The paper focuses on the international system of finance, the role it plays in the ongoing current crunch, and the prevention and solving of future ones.... he main reason for this addressing the paper is to focus on the international system of finance, the role it plays in the ongoing current crunch, and the prevention and solving of future ones....
7 Pages (1750 words) Essay

Chinese Economic System

The paper "Chinese Economic system" discusses that the Chinese Economic system is an example of the socialist economy in the world.... This implementation of the socialist system in the economy has contributed to the country's prosperity and has led to remarkable growth rates over the period of time.... This issue is one of the most sought after topics for researchers because, in recent years, much flexibility has been allowed in China's economic system....
17 Pages (4250 words) Essay

The Nature of Firms in Different Economic Systems

It also establishes the fact that all firms are not the same; their set of functions substantially differs according to the economic system of state, in which they operate.... As it is shown in the essay, the type of economic system determines the way in which natural resources are allocated to the firms, the method of employing labour force and the remuneration of labor, the methods of selling goods and services.... The role of firms in economy is also influenced by the type of the economic system....
6 Pages (1500 words) Essay

Advantages Of Various Types Of Economic Systems

The economic system decides the amount and the mechanism of the resource allocation.... The factors of production, the organizations, and the market forces comprise the economic system that interacts with each other with an aim to resolve the economic problems (Anderton, 2009, p.... This economic system is of various types depending on the impact of market forces on the system....
4 Pages (1000 words) Assignment

Types of Economic Systems in Political Economy

It is important to understand that every economy is a special system with a fundamental objective of allocating resources geared towards exchange, production, distribution as well as consumption.... n order for any economic system to run efficiently and satisfactorily, it must be able to provide answers to several questions in the economic context.... An economic system provides the basis upon which answers to these fundamental questions can be established, however, it is important to understand that different economic systems answers these questions differently....
7 Pages (1750 words) Essay

Models of Economics

ocialism is an economic system that lies between capitalism and communism.... This paper will evaluate and analyze the four economic models; Chicago School Of Thought, Keynesian economic Theory, Socialism/Communism, and Development economics.... The Chicago school of thought came about in the 1940s at Chicago University and it is based on the free market....
4 Pages (1000 words) Research Paper

Introduction to Basic Economics

This paper 'introduction to Basic Economics" focuses on economic problems like scarcity and choice.... The biggest advantage of this system is that prices and wages are under a check and are regulated by the State.... This system concerns greatly with social welfare.... The proponents of this system claim that there is optimum use of resources and there is no exploitation of laborers by their employers....
6 Pages (1500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us