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This article explores the three primary economic systems: Market Economy, Planned Economy, and Mixed Economy. In a Market Economy, private enterprises own the factors of production, and resources are allocated based on supply and demand, driving profits. In contrast, a Planned Economy is characterized by government control over all economic decisions, eliminating private ownership and setting prices centrally. Lastly, a Mixed Economy blends both approaches, allowing for public and private ownership, where distribution is driven by both profit motives and social needs, aiming for a balanced economic framework.
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Economic systems Analysis Who makes the economic decisions? Who possesses the Factors of production? How are the resources allocated? How are goods and services distributed?
Market Economy • Minimum interference from the State • Factors of Production owned by private businesses and private people • Resources are supplied according to supply and demand • Distribution of Goods and services motivated by profits
Planned Economy • State has full control of the economy – Dictatorship • No private ownership of the Factors of Production • Government controls the supply of goods and services • Prices set by the government – goods and services are rationed
Mixed Economy • Economic decisions made by the state and private individuals • Factors of production owned by the state and private individuals • Resources are distributed according to supply and demand • Distribution of goods and services motivated by profits and the needs of the people
