Economics Systems and Thinkers

Question 1

Pros of Free Market

Answer 1

• price mechanism super efficient
• lower prices
• choice

Question 2

Pros of Command Economy

Answer 2

• correct market failure
• less inequality
• stop monopoly abuse

Question 3

Cons of Free Market

Answer 3

• inequality
• monopolies
• market failure

Question 4

Cons of Command Economy

Answer 4

• government failure
• destroy incentives (same wages)
• limited choice

Question 5

Hayek

Answer 5

• criticised command economies
• ^^ not possible for governments to collect all info
• supported free markets
  ^^ saw price mechanism as communication network

Question 6

Smith

Answer 6

• supported free markets
• government should leave markets alone
• invisible hand efficient at allocating resources

Question 7

Marx

Answer 7

• hated capitalism
• ^^ hated free markets as they led to capitalism
• supported command economies