Nowadays, most of the world is using mixed economy to allocate resources. Economy systems such as pure capitalism and communism was proposed in the 16th to 19th century previously. Capitalism is an economic system where the ownership of production, distribution and exchange of wealth is mainly under controlled by the private sectors. For communism, it is an economic system where the mean of resource allocation is decided by the government and what type of goods and services to be allocated. They also owned most of the land, building and other assets of the countries. Mixed economy consists of a market and command economy. It is the economies where the balance between distribution by the market mechanism and the planning process is much
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One of the disadvantages of communist economic system is that there many limitations towards everything, companies are not allowed to decide on what to produce and how much profits they can earn. Companies are being controlled on what to produce, there is no difference of funds being assign to the companies, all of them get the same amount of funds no matter what business they're doing, therefore employees wouldn't get motivated to work and increase productivity of the companies because the profit that is earned are always the same. In addition, companies do not consider about consumers' needs and wants as they're not allowed to decide on what to produce and how much they can earn, the goods produced are not depending on what the consumers' needs and wants. As mentioned before, the government uses the price mechanism to determine the the level of inputs or resources used to produce goods and services, and without the price mechanism, there will be difficulties balance the supply and demand of the economy. There are few examples of countries that uses communist economic system. One of it would be Vietnam, it was separated into two sides of Vietnam after the first Indochina war. North Vietnam was under a communist economic system with the support of …show more content…
Mixed economy creates fairness between the private sectors and governments, people are allowed to have freedom of speech. On top of that, there are less likely to have problems like inequalities of income and consumers' needs and wants are taken into considerations by the companies and
One of the disadvantages of communist economic system is that there many limitations towards everything, companies are not allowed to decide on what to produce and how much profits they can earn. Companies are being controlled on what to produce, there is no difference of funds being assign to the companies, all of them get the same amount of funds no matter what business they're doing, therefore employees wouldn't get motivated to work and increase productivity of the companies because the profit that is earned are always the same. In addition, companies do not consider about consumers' needs and wants as they're not allowed to decide on what to produce and how much they can earn, the goods produced are not depending on what the consumers' needs and wants. As mentioned before, the government uses the price mechanism to determine the the level of inputs or resources used to produce goods and services, and without the price mechanism, there will be difficulties balance the supply and demand of the economy. There are few examples of countries that uses communist economic system. One of it would be Vietnam, it was separated into two sides of Vietnam after the first Indochina war. North Vietnam was under a communist economic system with the support of …show more content…
Mixed economy creates fairness between the private sectors and governments, people are allowed to have freedom of speech. On top of that, there are less likely to have problems like inequalities of income and consumers' needs and wants are taken into considerations by the companies and