Economic System ModelsPaper Rating: Word Count: 1585 Approx Pages: 6
Hello Mr. Sajid and my fellow students. Me and my friend here are going to tell you about the main types of economies. There are three main types of economic systems:
First of all we will discuss the Market Economic System. In these economies, everything is privatised, that is, owned by the public. There is no government intervention. The prices of goods and services are determined by the forces of Supply and Demand. The consumers play a very central role in this type of economy. They are a very big deciding factor over what is being produced in the market and how much it is being charged.
For example, a watch is in high demand and the producers are unable to meet the supply quotas because of shortage of capital, so the shopkeepers will raise the price of the watch. This will a) reduce the sales. The reduced sale will mean that the watches will be in supply till the next shipment of watches b) Increase the profit so that the shopkeepers will be able to send more money to the producers and thus enabling them to make more watches. You will notice that the government has no