1.6 Free market, Mixed and Command Systems Flashcards
1
Q
What is a free market?
A
Market allocates scarce resources through the price mechanism
2
Q
What is a mixed economy?
A
Some resources owned by the public sector and some owned by the private sector
3
Q
What is a command economy?
A
Government owns most resources and allocates resources
4
Q
Advantages of free market?
A
1) Allocative efficiency
2) Competitive prices
3) Innovation
5
Q
Drawbacks of free market?
A
1) Inequality
2)Public Goods
3) Negative externalities
6
Q
Drawbacks of a command economy?
A
1) Bureaucratic costs
2) Absence of incentives
3) Low productivity
