Types of economy

Mixed Economy

Good example- UK/Europe

Mixture of government intervention and private enterprise

Most common

Advantages

-People have choices

-Government intervenes to prevent market failure

Disadvantages

-Funding for public/merit goods can be less than needed

-Market Failure can still occur.

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Free Enterprise (Market) Economy

Good example- US

Driven by demand

Advantages;Entrepeneurs fit well into this. 

-Demanded products have larger supply.

Disadvantages;- Unequal wealth distribution

-Less care of environment e.g higher pollution

-Poor suffer, rich benefit

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Command Economy

Good example- Russia

Heavily based on Demand

  • Government chooses who produces and what is produced. 
  • 5 year plan;

Advantages;-  Strong government makes sure public/merit goods are consumed at the right level.

-Government can control goods/services for the good of the country

Disadvantages;- Unable to efficiently allocate goods

-Shortages or surplus

-Minimum innovation

-Wages fixed, no choice for work

-5 year plan too long as things can change quickly.

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