StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

To what extent do you agree with free market economies being more effective than a mixed economy - Essay Example

Cite this document
Summary
Free Market Economy versus Mixed Economy University: Tutor Name: Free Market Economy versus Mixed Economy A free market economy involves a very limited role for the government, whereas the mixed economy consists of a mixture of both the free market economy and the command economy, where government virtually controls and regulates the economy (Dwivedi, 2002)…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.8% of users find it useful
To what extent do you agree with free market economies being more effective than a mixed economy
Read Text Preview

Extract of sample "To what extent do you agree with free market economies being more effective than a mixed economy"

Download file to see previous pages

they are free to decide on what to produce and purchase in the market respectively. In the free market economy, also known as the laissez-faire economy, the producers decide on what to produce as per the market demand and prices. In the latter, the government plays a very limited role in terms of deciding what is to be produced. In this case, the government has little or no command to direct on what goods and/or services are to be produced. However, in a command economy, the government has high command and control over dictating what types of goods and services are to be produced for the market, and the amounts to be produced.

On the other hand, the mixed economy is likely to be characterised by conflict since the economy is controlled by both the market forces and the government in terms of determining the types of goods and services to be produced. The mixed market economy is based on decision making by individuals and businesses for the private sector, and government decisions and regulation for the public sector (Anderton, 2012). Free market economies are likely to be more effective due to the dynamics in the market decision making, i.e. the consumers dictate what is to be produced in terms of consumption demand in goods and services.

The producers will choose the best cost-effective method of production for higher profit, and firms produce goods and services in terms of consumer demands and tastes, i.e. they produce goods and services which consumers are willing and able to purchase. The free market is effective due to the existence of healthy competition that allows for opportunities for profit making for firms and businesses, and at the same time ensures consumer satisfaction. The free market responds quickly to consumer demands, where goods and services are produced and delivered with due regard to demand.

The mixed economy is likely to be characterised by conflict due to override of authority, by either the government or individuals and businesses, in the determination of the allocation of goods and services. In the mixed economy, the government influences the market through taxation rates and setting laws to regulate the market economy. Additionally, the government provides basic services for communities, such as healthcare, education and policing, and hence hinders the investment in these sectors by individuals in the private sector.

However, the government plays a critical role in regulating business and market standards for the facilitation of healthy competition in the private sector and consumer satisfaction. The government is also effective in controlling the consumption of harmful goods through illegality declaration or high taxing (Gillespie, 2012). In the mixed economy, the government easily influences the aggregate market demand in its attempts to manipulate its budget deficits or surplus, known as the fiscal policy, for the realisation of economic goals (Rodrik, 2011).

The free market economy is more effective, for it creates opportunities for innovation and welfare improvement in both the individual and public interests, where individuals are allowed to make independent decisions that affect their own wellbeing (Rodrik, 2011). Individual consumers have the capability to make institutional arrangements for the enhancement of suitable interaction

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“To what extent do you agree with free market economies being more Essay - 2”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1495399-to-what-extent-do-you-agree-with-free-market
(To What Extent Do You Agree With Free Market Economies Being More Essay - 2)
https://studentshare.org/macro-microeconomics/1495399-to-what-extent-do-you-agree-with-free-market.
“To What Extent Do You Agree With Free Market Economies Being More Essay - 2”, n.d. https://studentshare.org/macro-microeconomics/1495399-to-what-extent-do-you-agree-with-free-market.
  • Cited: 0 times

CHECK THESE SAMPLES OF To what extent do you agree with free market economies being more effective than a mixed economy

Comparison of Free Market Economy and Mixed Economy Systems

a mixed economy permits parallel operation of private and public entities.... In a mixed economy, the privatized businesses and the government share the control of monetary systems.... a mixed economy market confers various advantages.... In presentation of the fundamental advantages, it is pertinent to address every merit with a demerit to acquire a clear perspective of the differences between a free economy market and a mixed economy market....
4 Pages (1000 words) Essay

Internationalization of Trade

The new models of business and strategies used in these economies are based on their adoption of free market policies, liberalization and permission for FDI, and, of course, abundantly available cheap labour.... Using examples the writer seeks an answer why and in what ways the retail, financial and telecommunications sectors are becoming more international.... The topicality of the work is stipulated by the fact that since East Asian economies have joined the world trading community they have been causing a huge shift in relative prices and incomes of labor, commodities, goods, and assets....
9 Pages (2250 words) Essay

To what extent do you agree with free market economies being more effective than a mixed economy

The reason as to why a free market economy is better than a mixed economy is based on the fact that the market is very competitive.... a mixed economy has some elements whereby the forces of demand and supply play a role in regulating the prices of commodities, at the same time; the government has some interference with the affairs of the market (Clarke, 2009).... In as much as the mixed economy was developed to solve the problems of a free market economy, it is important to denote that a free market economy is still a good form of market structure as compared to a mixed economy....
4 Pages (1000 words) Essay

How Do Multinational Firms Affect the World Economy

The international organizations work towards the betterment of the global economy consisting of the developed countries, developing countries as well as the backward countries.... In support of your argument, select an important institution and discuss the developing countries' experience and the ways in which the institution has impacted development. International development is a concept… The roles of international in situations like the United Nations (UN), International Monetary Fund (IMF), World Trade Organization (WTO), the World Bank and the World Health organization (WHO) ve been much significant in the development of various countries in different aspects like trade practices, health, education, financing systems and so on....
15 Pages (3750 words) Essay

To what extent do you agree with free market economics being more effective than a mixed economy

Those who do not feel that this kind of market economy can be efficient argue for a mixed market economy which includes the role of the government both as a regulator as well as a player in the production of goods and services.... In a mixed market economy, the private sector is involved in the greater part of the production, but under the watch of the government.... Each economic system has its own… In the developed world, there are arguments both for and against certain economic systems. In United States, the two competing economic systems are the free markets systems and the mixed markets economy....
4 Pages (1000 words) Essay

Free Market Economy versus Mixed Economy in Two Different Countries

It allows the forces of demand and supply to interact freely to determine a region's economic In contrast, a mixed economy captures the traits ascribed to the command economic system as well as the free market system.... These areas are sensitive and require a commanding authority, and that is how the government comes in-the reason for a mixed economy.... The mixed economy is the most favourable global economic system, with a few exceptions.... With mixed economy, so much planning is required which is a waste of time and resources....
4 Pages (1000 words) Essay

Power in Domestic and International Politics

ealism prevailed in the post-Second World War period as a pessimistic view of world politics; they argued that their views were more realistic than the idealist and utopian beliefs of the liberals.... rdquo; For Morgenthau, the assumption that scientific truth could be carried over from science to the realm of politics was wrong, since politics was the realm of power rather than truth.... hellip; The more power a particular state wields, the more likely it is of achieving its goals, the primary goal being that of basic survival....
9 Pages (2250 words) Term Paper

Comparison of Buying Time by Wolfgang Streeck

However, Naomi is not an expert in any of these fields thus we cannot conclude that Naomi's work is scholarly, but we can say it is more of journalistic.... Successive crises have been more spread, rapid and severe.... Various interconnected factors contribute to the crisis and the author questions when this trend will ever come to an end, and what its culmination will bring to the contemporary society....
7 Pages (1750 words) Book Report/Review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us