2.9 Market Economic System

Question 1

Define market economic system

Answer 1

Where all resources are allocated by the market and there is little to no government intervention

Question 2

What are 3 features of Market Economic System?

Answer 2

• All resources owned/allocated by private individuals
• Production is done using cheapest, yet efficient combination of resources
• Demand and supply fixes the price of products, this is called price mechanism

Question 3

What are 2 advantages of Market Economic System?

Answer 3

• A wide variety of goods and services
• Firms respond quickly to changes in consumer demand

Question 4

What are 2 disadvantages of Market Economic System?

Answer 4

• Public & Merit goods may not be produced
• Demerit goods may be produced