MOTIVATION & MARKET

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MOTIVATION & MARKET

Mixed economy

It allows the federal government to safeguard its people and its market.

-Of a command economy

It is driven by the motivation of the self-interest of individuals.

It allows the free market and the laws of supply and demand to determine prices.

It protects private property.

-Of a market economy.

an economy in which there are elements of both public and private enterprise.

Command economy

The government creates laws, regulations, and directives to enforce the central plan. Businesses follow the plan's production and hiring targets. They can't respond on their own to free market forces.

The government owns monopoly businesses.

The central plan sets the priorities for the production of all goods and services. These include quotas and price controls

The government allocates all resources according to the central plan. It tries to use the nation's capital, labor and natural resources in the most efficient way possible.

The government creates a central economic plan.

a socialist economic system in which production and distribution of goods and services are controlled by the government and industry is mostly publicly owned.

Market economy

Limited Government. The role of government is to ensure that the markets are open and working.

System of Markets and Prices. A market economy relies on an efficient market in which to sell goods and services. That's where all buyers and sellers have equal access to the same information.

Competition. The force of competitive pressure keeps prices low.

Motive of Self-Interest. Everyone sells their wares to the highest bidder while negotiating the lowest price for their purchases.

Freedom of Choice. Owners are free to produce, sell and purchase goods and services in a competitive market.

Private Property. Most goods and services are privately-owned. The owners can make legally-binding contracts to buy, sell, or lease their property.

Characteristics

a capitalistic economic system in which there is free competition and prices are determined by the interaction of supply and demand. Expand Also called free market economy.