1.1.6 Free Market, Mixed and Command Economies

Created by: 13clarken
Created on: 18-04-19 13:53

A ... economy is where the government doesn't have any control over an economy. It is determined by the open market including producers and consumers

Free Market

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A ... economy is when the government has full control over an economy

Command

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A ...economy is where both the government and private businesses control the economy

Mixed

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The state provides ... because these are goods that people who don't pay still benefit so the state provides them to stop some people paying, which prevents the free rider problem

Public goods

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The state provides ... goods because people are entitled to healthcare and education even when they can't afford it and it creates positive externalities

Merit goods

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... of the free market economy: Firms have incentives to be efficient and provide goods and services demanded by consumers, avoids government intervention, profit motive provides incentive to use resources efficiently

Benefits

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... of the free market economy: Public goods are not provided in a free market economy, there is no social security for unemployed or low earners, high prices can be set and exploitation of workers and consumers, and merit goods are under provided

Problems

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... of command economies: Helps the government to overcome market failure, can prevent abuse of monopoly power, prevent mass unemployment, can produce goods which benefit the whole of society

Advantages

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... of command economies: Government agencies usually have poor information about what to produce, unable to respond to consumer preferences, threat to democracy and liberty

Disadvantages

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... of mixed economies: Business and industry can be left to private firms, reduction in the amount of government regulation, enable government regulation where there is market failure, taxing or regulation or subsidies set by government

Advantages

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... of mixed economies: It can be difficult to know how much the government should intervene, allowing too much government intervention and allowing too much market forces

Disadvantages

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Other cards in this set

Card 2

Front

A ... economy is when the government has full control over an economy

Back

Command

Card 3

Front

A ...economy is where both the government and private businesses control the economy

Back

Card 4

Front

The state provides ... because these are goods that people who don't pay still benefit so the state provides them to stop some people paying, which prevents the free rider problem

Back

Card 5

Front

The state provides ... goods because people are entitled to healthcare and education even when they can't afford it and it creates positive externalities

Back

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1.1.6 Free Market, Mixed and Command Economies