Economic Systems

Free market economic system:

The intervention of government is kept at a minimum level or neglected in free market system and all the economics resources comes under the private sectors as well market. Price mechanism will determine how much of goods or services will be supplied according to the market demands. Most decisions are based on market mechanism. The supply, demand and ability play the vital role in market decision making. As per looking at the free market system it raises the various unsolved questions like who will produce the goods and services and infrastructures for the country to meet the needs of every public. If we assume that prices accurately reflect costs and benefits, decisions made by both producers and consumers will lead to an efficient allocation of resources. The constant lure of the chance to strike it rich is what drives individuals and makes the system so dynamic and relatively efficient in allocating scarce resources. Free market economies operate through the price mechanism. Also called FREE-MARKET ECONOMY is one where decisions are made through the market mechanism. The forces of demand and supply, without any government interference, determine how resources are allocated. What to produce is decided upon by the level of profitability for a particular product. Buyers cast their spending votes in the market place. How production should be organized is equally determined by what is most profitable. Firms are encouraged through the market mechanism to adopt the most efficient methods of production. For whom production should take place, production is allocated to those who can afford to pay. Consumers with no money cannot afford to by anything. Market economic: An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning. This is the opposite of a centrally...