Essay Example about Economic Systems: Market vs. Mixed

Each government and company has to answer these three economic questions. “What will be produced” “Who will produce it” “Who will receive the items”. These questions, as well as questions about the scarcity of a country, have to be answered when deciding on which economic system to use. Scarcity is the idea that we have a limited supply of land, labour, and capital, which drives price and economics. An example of this is inflation. The two types of economic system I will be talking about are Market and Mixed. But that poses two questions. What is a market economy? A market economy resources are owned and managed by private companies owned by individuals. And those companies answer those economic questions. Adam Smith is often regarded as the first economist. In his famous book published in 1776, commonly known as the Wealth of Nations. Smith described the advantages and has said, “in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world.” But now we have to ask what is a mixed economy? In a mixed economy, some resources are privately owned by individuals and some are owned publicly by the government called “crown corporations”. So both companies and governments answer those questions. Andrei Dmitrievich Sakharov, a human rights activist, won the 1975 Nobel Peace Prize. Has said. “Our country, like every modern state, needs profound democratic reforms. It needs political and ideological pluralism, a mixed economy and protection of human rights and the opening up of society.” while talking about the former soviet union.

In this paragraph, I will be talking about a market economy. There are many pros and cons of this system, but I will be talking about two specific pros and two specific cons. The pros are “Competition Drives down prices” and “Market minimizes waste”. The first one I'll talk about is competition drives down prices. The price market system is based on the principle that every individual acts in their best interest. Producers seek to create popular items to gain the highest profit. Consumers look for the lowest prices at the best quality. These conflicting desires bring market price down to get cheaper items, in the words of Adam Smith, guided by an "invisible hand." In other words, not a single company sets the price because they are all competing to get more consumers. The second pro is that Market economies minimize waste. Market economies are based on the concept that people are free to make their own choices about what services or products to purchase. Market economies are efficient because individuals aim to produce goods with little to no wasted resources. Most People would not throw away resources or money, so producers work to create greater profits by lowering wasted resources.And consumers will spend their incomes in ways that maximize satisfaction.

The cons are. “It doesn't always take greater good into account” and “Outcomes are not equal”. I will first talk about the issue related to greater good. Since a company is focused on making profit, they may put some prices of production on consumers. like the cost of dealing with byproducts like pollution. Also, because they want to have greater profits, they may ignore their employees' health and safety. Now I will talk about the issue of them being unequal. Market economies are focused on what you want, so a comedian may make a large amount more than a teacher because they do not focus on what we need but what we want. But back to the question of how the Market economy solves the issue of scarcity. I've listed the pros and cons. The market focuses on producing less waste while creating more profit, and individuals decide how to answer the question. They only focus on producing what is wanted to use our scarce resources on the wants, not needs. The market economy reflects the United States quite well.

In this paragraph, I will be talking about Mixed economies. I will focus on two pros and two cons for a mixed economy. The pros are. “Equal distribution of control” and “A defined role for the government”. I will first talk about the distribution of control. A mixed economy gives the government more control. This allows businesses the freedom to thrive. Because most of the business is left in the hands of those private, individually owned businesses. But services that will not benefit the private sector, like utilities, libraries, hospitals, roads and social security, are left to be handled by the government. Which can increase taxes. Now I will talk about the defined role of the government. Because the government has some control, still they can focus on improving economic stability. By doing so, they will bail out businesses that are failing if that will hurt the overall economy. So our government protects the overall economy. The cons I will talk about are. “Higher taxes” and “Government having too much control”. I’ll talk first about higher taxes. With more government involvement with social programs and bailing out companies. There is a large increase in the cost to run the country, which raises taxes so the government can keep these programs running. Now I will talk about the government having too much control. A mixed economy sometimes can have too much government intervention which can harm the economic stability. Because figuring out a government's exact role in dealing with businesses can be difficult and government actions can be influenced by recent events, which can harm economic stability. This reflects Canada's economic system very well.

Now I will talk about my opinion on the matter. I believe that both economies handle certain problems better than others.But i prefer a mixed economy. I like the idea of the government interfering if it will harm the economic stability of the country. But I would rather they not have too much control and freak out based on the events going on in the world. But having extremely little government involvement can damage the economy more, because if a large company goes bankrupt, it will lower the amount of jobs available. Which will cause inflation to rise and increase the population of homeless. I believe that a market economy doesn't have too much intervention, and that means it is lacking in social programs. I would rather they take care of those social programs much more like in a mixed economy. And I would rather have a much more equal distribution in control over business. Because with the distribution of control, it's more difficult to make monopolies on a certain product. So, like I said, I believe a mixed economy answers the question better than a market because the market also does not protect economic stability. Which can cause inflation, make it harder to work and live and the cost to produce items would rise. So that can cause damage to a country's quality of life.

Like I said before, I believe mixed answers the question of how to deal with scarcity better than a market economy. And with this essay, I have provided information on both systems. I believe both systems have their strengths. But I would rather be mixed because of the better quality of life. The fact still remains that in order to have a country or society run, it needs an economy.