ECONOMIC SYSTEM SCHEME

Market economy

The market economy is an economic system in which all decisions are decided by the market. The relationship between supply and demand determines the quantity and price of goods and services traded.

DIFFERENCES:

DECISION MAKING

The State

The Market and the State interact.

The Market (Consumers and Producers)

SIMILARITIES

The main decisions on resource allocation, production and pricing are taken by the authorities.

Production assets are owned by the State and private agents.

The market economy is a social system of division of labour based on private ownership of the means of production.

Command economy

In this system, it is the State that decides how to solve fundamental economic problems, since it organizes economic activity and decides, through planning, what is going to be produced, how it is going to be produced and how this production is going to be distributed.

Mixed economy

An economic system in which the market is responsible for allocating resources, but
the state intervenes, to a greater or lesser extent, to regulate its functioning. It is a system that incorporates elements of both the market economy and the command economy, in different proportions.