Every country has the difficult decision of how to support their people, including their wants and needs; they do so by picking a specific economic system. There are four completely different types of economic systems; traditional, command, market, and mixed economies. “Most countries have a mix of three different types of economic systems”. (Clayton 55) India is a worthy example of mixing the three main economic systems by combining elements of a traditional, command, and market economy. (Clayton 33) Traditional economies are based on scarce resources, as well as rituals, baits, and customs; much different than command economies.
Command economies generally have one central authority that makes the dominant economic decisions. Last but not least of the three main economic systems is the market economy. Market economy is very similar to free enterprise economy, in the ways of helping people make decisions and allocate resources by the supply, demand and price system. There is also an economy called mixed economy. This is the type of economy that India uses to support their wants and needs of their people. Out of all of these four types of economic system the most successful is a market economy.
Market economies give the most freedom not to Just specific groups of people, but to everyone. Market economies also have the highest degree of consumer satisfaction as well as a lack of government interference. Freedom is a very important inanimate object most individuals wish to have in their life. Market economies provide freedom of all kinds to all people; such as being able to spend their own hard earned money on any good(s) or service(s) he/she chooses to. Another type of freedom market economies provide is the ability to choose where to work, whom to work for, or what education the individual wants to ruse. They (individuals in a market economy) also are free to decide where and when they want to work and if they want to invest further in their own education and training” (Clayton 38). By having the freedom of spending money on any good or service the consumer wishes to have, this not only gives individuals their freedom it also helps producers of goods and services because the consumers are basically answering the question of WHAT to produce for the producers. The consumers buy a good or service they want or need and then the results of how popular the good or revive determines the WHAT factor, telling producers what to make more of. Clayton 37) Consumer satisfaction is a large part of a market economy or any economy. Market economies have a high degree of satisfying consumers. Consumers have several choices to choose from when it comes to satisfying their wants and need. An example of this is if “51 percent of people want to buy classical music, and 49 percent want to buy rap music, people in both groups can still get what they want”. This shows Economic Systems By shanties are not controlled by the government on what they can and cannot buy. Clayton 39) Another important advantage of a market economy is that government has a small amount of interference.
There are only a few situations where the government has the ability to interfere with the economic system, such as “national defense, environmental protection, and some care for the elderly, the government normally tries to stay out of the way of buyers and sellers. ” (Clayton 38) The government role may be small but it is defiantly a very important role in the market economy. The government’s main roles are to provide a legal system, provide public goods, and erect market failures. (Ross) All these factors are the important parts of the government’s interference.
Although market economies have large factors making them the most beneficial economy, they too have their own flaws and disadvantages. The market economy has a high degree of consumer satisfaction as well as a wide variety of goods and services. Market economies “may not provide enough of some basic goods and services”(Clayton 39). One example of this is when private producers are mainly focused on providing products that with benefit them as well as making a profit by selling. Private markets do not adequately supply all of the roads, universal education, or comprehensive health care people would like to have.
This is one of the market economies’ disadvantages but they make it up by having a large diversity of goods and services unlike the command economy. The command economies do not meet the wants and needs of their consumers (Clayton 38). “They ignore the basic wants and needs of consumers… For example, generations of people were forced to do without consumer goods and adequate housing. ” Market economy makes sure that the choice of one groups’ nonuser satisfaction doesn’t not affect the choices of any other group (Clayton 39)”.
Also market economies do not discourage new ideas for a better economic system, unlike the traditional economies. Traditional economies have strict roles for everyone in their traditional society therefore they generally do not agree to changes. Market economies embrace change gradually. “For example, gasoline prices were low, so people tended to buy large gas-guzzling Subs. When the price of gas rose sharply in that year, SUB sales fell, and smaller, more fuel-efficient vehicles became popular Clayton 38)”.
Market economies may not be perfect but there is no such thing as a perfect economy. Pure market economies have the most beneficial options and freedom for people even though they also have a few flaws. Compared to traditional and command economies market economy make changes gradually to benefit their economy. Market economies also have the best consumer satisfaction between all three main economic systems; command, traditional, and market. Mixed economy is a popular economic system because most countries do not have a pure economic system.