1. How do the laws of supply and demand vary with each economic system?
In a market economy, the amount of demand is determined by the buyer’s needs and his/her level of earnings. The aggregate demand is a sum of individual demands of buyers for the product at a particular time. The higher the profitability of goods production is, the greater the supply will be. Command economy is characterized by the centralized decision of what, how, to whom and when to produce. Demand for goods and services is established on the basis of statistical data and the country’s leadership plans. The economy has a high concentration of production and monopolies. In a mixed economy, the consumer sector is almost all owned by private companies. However, some products can be produced only in a traditional economy – folk clothes, some food and so on (Sloman, Wride, and Garrat 93).
2. For a business owner, what opportunities prevail within a free-economy market?
First of all, there is full economic freedom (business freedom, freedom to choose a category of buyers and sellers, resource transportation, pricing policies, etc.). Secondly, the supply depends on the demand for goods, so all manufactured products are in demand. Also, the state does not play a significant role in the economy; its role is limited to regulation of the situation in the economy through laws (Lipsey and Chrystal 174).
3. Why is the US considered a mixed economy?
Mixed economy in the United States is characterized by the fact that state regulation is presented to a much lesser extent than in other countries, because the state property’s size is small. The main position of the US economy belongs to the private capital, the development of which is stimulated and regulated by government agencies, legal regulations, and tax system (Lipsey and Chrystal 213).
4. From a consumer’s perspective, how might product and brand choices vary between a command economy and a free market economy?
The market economic system improves not only the quality of products due to competition but also the quality of public services. Competition is the engine that promotes continuous improvement. In command economy, the prices were low, but the shortage of goods flourished. Any company was not interested in improving the quality of products or increasing the volume of its production (Sloman, Wride, and Garrat 132).
Works Cited
Lipsey, Richard G. and Chrystal, Alec. Economics. Oxford: Oxford University Press, 2015.
Sloman, John, Wride, Alison and Garrat, Dean. Economics, 8th ed. New Jersey: Pearson Prentice Hall, 2012.
