Contrast How A Market System And A Command Economy

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1. Contrast how a market system and a command economy try to cope with economic scarcity. A market system permits private ownership of resources and arrange economic activity through market prices. Participants act in their own interest seeking to increase satisfaction through their own profit regarding decision or consumption of their production. Market system is the process of how goods and services or produce and supplied by whomever that is willing to do so. The end result is competition and widely distributed economic power. The command economy is defined by public ownership of all property resources and economic decisions are made through central planning. The planning board which is appointed by the government determines production goals for each enterprise. The division of output between capital and consumer goods is decided based on boards long-term priorities. 2. How does self-interest help achieve society's economic goals? Why is there such a wide of desired goods and services in a market system? In what way are entrepreneurs and businesses? In what way are entrepreneurs and businesses at the helm of the economy but commanded by consumers? It help help consumers obtain products at lowest price apportion their expenditures to maximizes their utilities. Self – interest gives interest direction and consistency to what might become a chaotic economy. Many consumer want a diverse group of products offered , this allows the market system to keep up with the needs. Entrepreneurs and businesses are at the helm of economy they can drive what the consumer want until their businesses fails for not providing the desired goods. 3. Why is private property,and the protection of property rights,so critical to the success of the market system? How do property rights encourage cooperation? By being an owner of private property and the protection of property rights it encourages maintaining and facilitating the exchange of the property. However, the importance of property rights they encourages to cooperate by ensuring that all mutually agreeable economic transactions take place. 4. What are the advantage of using capital in the production process? What is meant by the term “division of labor”?
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