1. What to produce? Whatever the government says to produce
2. How to produce? However the government tells you to produce
3. For whom to produce? For whomever the government tells you to produce
Basic economic questions are answered by consumers
Laissez-faire is a pure market economy meaning “allow to do”. The government has little or no power in what is produced or sold.
Free-enterprise system- business owners set their own prices and sell their own goods.
Adjusts to change based on consumer wants High level of individual freedom Low level of government interference
Because individuals make the decisions, everyone has a voice in the way economy runs
Wide variety of available goods and services Many choices=high degree of consumer satisfaction
Poverty: only those with money can participate
Market does not provide for people’s basic needs. Government must attempt to do this (Think about Katrina)
High degree of uncertainty: people lose their jobs and businesses fail
Greed based system puts profits before people (think about loss of jobs here. What caused it?)
Are they truly Free market economies? Does the government regulate businesses? Does the government control any businesses?
1. What to produce? Directed by the consumers.
2. How to produce? Companies decide cheapest and most efficient means of production.
3 For whom to produce? The consumer that has the ability and money to afford the companies product.
An economy is considered a mixed economy when there are characteristics of more than one economy evident. For example, the United States is a mixed economy because there are privately owned businesses that operate on their own like a market system but they are regulated by the government also.