| A major problem of planned economies is inability to predict consumers demand. | ||
| Out of date and unattractive products are usually underproduced. | |||
| All countries with planned economies have the same system. | |||
| Industries of planned economies can produce the goods and services they want. |
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In planned economies industries
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| meet a production target | ||
| consider peoples demands | |||
| decide what to produce | |||
| own natural recourses |
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What causes delays and queues for some products?
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| Underproduction of some goods does. | ||
| Overproduction of some goods does. | |||
| Cosumers demands do. | |||
| Cosumers decisions do. |
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| A planned economy when the government takes all important decisions can lead to delays and queues. | ||
| A planned economy is a command economy with central planning and direction of the government. | |||
| Industries of the planned economies are set out production targets to meet in the five-year plan. | |||
| Command economies slowly when respond to changes in people's tastes and fashions which leads to unproduction. |
Mixed economies
1. A mixed economy contains elements of both market and planned economies. At one extreme we have a command economy, which does not allow individuals to make economic decisions, at the other extreme we have a free market, where individuals exercise considerable economic freedom of choice without any government restrictions. Between these two extremes lies a mixed economy.
2. In mixed economies some resources are controlled by the government whilst others are used in response to the demands of consumers. Technically, all the economies of the world are mixed. Some countries are nearer to command economies, while others are closer to free market economies.
3. The aim of mixed economies is to avoid the disadvantages of both systems while enjoying the benefits that they both offer. So, in a mixed economy the government and the private sector interact in solving economic problems. The state controls the share of the output through taxation and transfer payments and intervenes to supply essential items such as health, education and defence, while private firms produce cars, furniture, electrical items and similar, less essential products.
4. The UK is a country with mixed economy. Some services are provided by the state (for example, health care and defence) whilst a range of privately owned businesses offer other goods and services.
