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

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.

Drawbacks:

- 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.

Drawbacks:

- Eliminates class division in people.

Market

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

Mixed

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