Econ: Economic System Strenths and Weaknesses


TraditionalSystemOne of the few advantages existing in a traditional economy is that the roles of individuals are clearly defined. Every member of the society knows exactly what they are to do and most don’t have any complaints about it. There are also many disadvantages to this type of society. These societies are often very slow to change and when new technologies are introduced, these ideas and techniques are discouraged.

CommandSystemCommand economies focuses on equality and the government tries to eliminate all private property and distribute its good equally. If done correctly no one is in poverty and no one is wealthier than another. Social services are also emphasized in this type of economy. The government will provide equal health care, education opportunities, and make sure all people are fed. Another strength pf this type of economy is that it is capable of rapid change for major problems. The government owns the companies, so if production needs need to be shifted into a different area, the government is capable of doing it rather quickly. Finally, command economies are very stable. Command economies will never have sudden depressions. Command economies also have many weaknesses. In a command economy there is very little freedom. The individual usually doesn’t have the opportunity to decide what they want to do for a career, and they have no control over the goods they receive. Another major problem is that there is little reason for innovations, hard work, or quality of the work. Since no one makes more money than everyone else, the people feel like there is no reason to work hard. Another weakness is that there is little focus on consumer wants. Finally, when it comes to minor day-to-day changes, the government has a hard time coping with them.

MarketSystemA strength of a market economy is it can adjust to change easily. If there is a demand for one thing, companies have the ability to change what they produce instead of having to go through too much government. People have the ability to make as much money as they can and do what is in their best interest. Another strength of a market economy is that the government tries to stay out of the way of businesses. Although the government sets certain standards businesses must follow, for the most part businesses can do as they please, allowing them to produce what they want, how they want. The market economy produces a great variety of goods and services for consumers. If there is a demand for a good or service, the demand will almost always be met in a market economy. A weakness of a market economy is that it doesn’t always provide the basic needs to everyone in the society. The weak, sick, disabled, and old sometimes have trouble providing for themselves and often slip into poverty. Another problem is that it becomes hard for a government with so many private businesses to provide adequate defense, education, and health care to its people. Another weakness to this type of economy is that there is uncertainty in the business world. One company could easily be forced out of business causing all of its employees to become unemployed and lose their means of income. Finally, there are market failures. This can cause some companies to become too powerful and become a monopoly. If the government doesn’t step in, the monopoly can take advantage of the consumers and charge higher prices.


Homework:
Chapter 2 Quiz II retest – closes Thursday 9/29

Arrows-02-june

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