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8 Cards in this Set
- Front
- Back
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Mixed Economies:
central planning (CP) Market Economy (ME) |
An economy consisting of both. Some decisions are made by market forces while some other decisions are made by the government or some central authority.
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Resource ownership
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CP - no individual ownership
centralised ME - private ownership |
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Pattern of participation in decision making
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CP - government decisions / centralised
-decisions “move outwards” from planners, one person tells next person what to do ME - -decentralised there is economic freedom -consumers make buying decisions -entrepreneurs make production decisions |
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Mechanism used to achieve goals
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CP - 5 year plans
1 year plans input-output models -all production is related and linked together in plan ME - market/price mechanism: -increase in consumer demand shortage, so price rises good more profitable, so supply increases resources allocated to production of good increases -vice versa for decrease in demand |
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Incentives used
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CP - medals/awards/decorations
fines/penalties (wage differences are limited, fixed by planners – little wage incentive) ME - income and profit -to increase profit costs are minimised efficient resource use development of new technology |
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What to produce?
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CP - planners decide
ME - determined by consumer demand |
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How to produce?
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CP - planners decide
-a guarantee of full employment gross overstaffing ME - determined by producer -choose method that minimises costs |
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For whom to produce?
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CP - -planners determine incomes & distribution of goods
-subsidised prices on basic goods widespread shortages ME - determined by income -income is determined by the resources contributed to production |
