Explain how economic systems attempt to allocate resources effectively.
There are three economic systems attempts to allocate the resources on different countries and these systems are
Free economics, market
A term free economics, market system use for countries where government is not playing any major role for business organizations, Business organization and attached factors such as labor and suppliers are free to work whatever and wherever they want to do. In free market economy, business form free for imports and exports.They are open as many as they want business . In free market and capital is owned by individuals and such people make decisions for their self-interest and this system is associated with the capitalist system.In free-market economy firms aims to make maximize profit, customer wants the best value of money and workers demand high wages. However, this system creates different as some consumers unable to compete with prices or companies made too many products which might be risk to waste. (Solomon and Jones, 2014)
Advantages and disadvantages
⦁ It is a simple economic market system which anyone can use
⦁ No business restrictions.
⦁ Good for businessmen and professionals
Disadvantages
⦁ It might not good for customers in term of prices because no one stop to fix prices
⦁ labor can charge whatever they like
⦁ It might misuse by some organizations
The command economy
A system where business organizations are not free to operate. The state plans the allocation of resources and land and capital collectively owned. In this system plans are made to allocate resources for current and future investment, microeconomics and macroeconomics level. In all cases, government allocates resources according to the needs and requirements. Government is responsible to allocate capital and labor as well according to their needs. In command system decision made by government or authorized committee.Prices also set by such authorities and its depend on products and situation. This marketing system is good and bad for owners in case if the production cost is high i.e. £5 and may be government set 3£.So in this case it is not in favor of businessmen. This system belongs to socialist or communist (Sloman and Jones, 2014). Moreover, labor wages also decided by government and level of material as well.
Advantages
⦁ Government and authorities control of business activities where there is less chance of misuse
⦁ Useful to produce good according to the needs of the customer, so resources can be safe and protect from wastages
Disadvantages
⦁ It does not in the favor of businessmen best interest
⦁ Product price fixing is not in the hands of labor or professionals because the government is responsible to set labor of products prices.
Mixed economics system
A system where business firm and government responsible making decision and allocate resources with participation. This is a balanced system where government and business organizations are equally responsible for the activities. Business firms work freely.However, Government keeps an eye on their activities. All though government do not decide about allocation of resources, land, capital and labor wages, etc. In this system, government concern the business practices and ethics where business organizations do not violate business rules and laws. In UK there is a mixed economic system practice where the government always keeps the monitor taxation system and business activities in term of laws and regulation. (Sloan and Jones, 2014)
Advantages and disadvantages
⦁ There is no chance of the violation of rules and regulations
⦁ It creates flexibility in business in term of productions for both professional and customers.
Disadvantages
There are three economic systems attempts to allocate the resources on different countries and these systems are
Free economics, market
A term free economics, market system use for countries where government is not playing any major role for business organizations, Business organization and attached factors such as labor and suppliers are free to work whatever and wherever they want to do. In free market economy, business form free for imports and exports.They are open as many as they want business . In free market and capital is owned by individuals and such people make decisions for their self-interest and this system is associated with the capitalist system.In free-market economy firms aims to make maximize profit, customer wants the best value of money and workers demand high wages. However, this system creates different as some consumers unable to compete with prices or companies made too many products which might be risk to waste. (Solomon and Jones, 2014)
Advantages and disadvantages
⦁ It is a simple economic market system which anyone can use
⦁ No business restrictions.
⦁ Good for businessmen and professionals
Disadvantages
⦁ It might not good for customers in term of prices because no one stop to fix prices
⦁ labor can charge whatever they like
⦁ It might misuse by some organizations
The command economy
A system where business organizations are not free to operate. The state plans the allocation of resources and land and capital collectively owned. In this system plans are made to allocate resources for current and future investment, microeconomics and macroeconomics level. In all cases, government allocates resources according to the needs and requirements. Government is responsible to allocate capital and labor as well according to their needs. In command system decision made by government or authorized committee.Prices also set by such authorities and its depend on products and situation. This marketing system is good and bad for owners in case if the production cost is high i.e. £5 and may be government set 3£.So in this case it is not in favor of businessmen. This system belongs to socialist or communist (Sloman and Jones, 2014). Moreover, labor wages also decided by government and level of material as well.
Advantages
⦁ Government and authorities control of business activities where there is less chance of misuse
⦁ Useful to produce good according to the needs of the customer, so resources can be safe and protect from wastages
Disadvantages
⦁ It does not in the favor of businessmen best interest
⦁ Product price fixing is not in the hands of labor or professionals because the government is responsible to set labor of products prices.
Mixed economics system
A system where business firm and government responsible making decision and allocate resources with participation. This is a balanced system where government and business organizations are equally responsible for the activities. Business firms work freely.However, Government keeps an eye on their activities. All though government do not decide about allocation of resources, land, capital and labor wages, etc. In this system, government concern the business practices and ethics where business organizations do not violate business rules and laws. In UK there is a mixed economic system practice where the government always keeps the monitor taxation system and business activities in term of laws and regulation. (Sloan and Jones, 2014)
Advantages and disadvantages
⦁ There is no chance of the violation of rules and regulations
⦁ It creates flexibility in business in term of productions for both professional and customers.
Disadvantages
- Government can refuse or stop business activities if firm are not following rules and regulations according to the government standard
0 comments:
Post a Comment
Please Comments