Economic Systems: Market Economy

The government has absolutely no authority to Interfere with the business activities of people. They also cannot control the choices of the consumers nor could they decide what the producers would manufacture; therefore, they also cannot predict the outcome of these decisions. When economic problems arise, the government will not be held responsible because the private sectors and Individuals are the ones taking action to resolve these problems. This economic system Is by far the best when it comes to achieving effective allocation of resources.

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Driven by the refit that they are going to make, firms are doing their best to produce goods and products that cost less but, at the same time, they are also making sure the products do not lose its quality and efficiency. This is because the market economy has a free price system that determines the price of goods set by the interchange of supply and demand. Through the free price system, supplies are rationed, income is distributed, and resources are allocated, meaning there is little to no waste in resources.

Compared to the command economy, where there is very limited production since only one person decides for the needs and wants of everyone. Being a free market, companies and firms would be able to produce what the majority of people want because this would make them profit; if they were to manufacture goods which the people have little interest in, it would surely lead to a waste of resources or it would be taken out of the production line.

There is also a wide variety of products to ensure that the different tastes of consumers will be met. It may seem that this system is perfect but it also has its flaws, one of these is unemployment. Because manufacturers would use the most advanced technology for production to guarantee efficiency, there would be less human resources and more machines working in factories. On the other hand, this type of economic system does insure a sustainable development and inclusive growth.

Because competition is present, the producers would find ways to make sure that their products are better than their competitors. Increased consumption of products also means the Increase of economy. This would eventually lead to the lowering of prices and new Ideas to make their products better. This will continue to grow and develop because we have unlimited wants and needs.