The second economic system is the market economy. The market economy is a system of
supply and demand. They produce and what size is controlled by price mechanism
(Ebert/griffin, pg. 11). For example the consumer decides whom he or she wants to buy
from and what they will pay for it. In a market system an individual can choose what
business they want to do business with or even if they want to operate a business
themselves.
The last economic system is the mixed market system. The mixed market system can be
associated with both the planned and the market economies. A mixed market shows traits
from both systems. For example cigarettes can be sold legally but government restricts
minors from purchasing the item. (Ebert/griffin, pg 12).
There are three major disadvantages of a planned economy. The first is that there is no
entrepreneurship. The second is consumers dont have any input as to what is produced.
The last major disadvantage is that there is no spur to improve quality and productivity.
The three main advantages of the Planned economy. First you will always fine sufficient
investment growth and always fine equal of wealth and last may encourage the spur of new
productivity.
Although there are many disadvantages a planned economy does have an advantage. There
will always be equal wealth and steady growth of investment.
Reference: Ebert and Griffin, R.W. (2005). Business essentials. Upper Saddle River, NJ:
Pearson Prentice Hall
Economic Systems (n.d.). Retrieved February 22, 2008, from
http://www.rpi.edu/dept/advising/free_enterprise/us_government/economic_systems.htm.