What Are The Benefits And Drawbacks Of Market And Mixed Economies?


3 Answers

Lily James Profile
Lily James answered

Market economy is a kind of economy which is based on the division of labor so that the prices of goods and services are set by a free price system. This price system is set by the law of demand and supply. On the other hand, a mixed economy is the one which has a number of characteristics from various economic system. It has a mix of both privately held and publicly held companies.

Market economy Benefits:
- Self regulation of prices with the market forces.
- Creates civil and political freedom.
- Capitalism can only be created with Market economy.
- Bottom up decision making which involves consumers.


- Produces class division.

Mixed Economy Benefits:
- Mix of public and private sector companies so that the profits are balanced.
- Cooperative decision making
- Healthy interaction.
- Is regulated by different laws and restrictions.


- Eliminates class division in people.

Jamie Hudson Profile
Jamie Hudson answered

Benefits - Individuals have all the control and can make all the decisions.
- Success lies solely on the individuals choices

Drawbacks - Unemployment is high
- There are no tax breaks
- The income depends on the individuals success


Benefits - Individual and Government views are present
- They are helpful in increasing national production
- Provides freedom of business ownership and profit earning
- Social Welfare and Political Freedom are also offered
- There are a variety of goods available
- As well as government support and guidance
- Mixed economies try to subsidize (rent) industries rather than own then
- There are tax breaks and other incentives offered
- All individuals Prosper as the community prospers

Draw backs - Not helpful in achieving optimal use of natural resources
- They suffer from the drawback from both market and planned economies
- If the community begins to suffer, all individuals are affected

Hope that helps :) ~ Jamie Hudson
Sana Profile
Sana answered
In a market economy, the income of an individual may rise or fall depending on his success. In other words, an individual does not have to depend on the society or community to prosper for his own success. Such an economic system allows for individual gain and random prosperity. On the other hand, in a mixed economy, the success of an individual depends solely on the prosperity of the community. Mixed economies keep significant loss or gain to a minimum as the entire economy seeks to adapt to changes in the environment and macroeconomic variables. If the status of the community improves, the individuals in the community also prosper.

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