{"id":5341,"date":"2019-02-14T09:27:50","date_gmt":"2019-02-14T03:57:50","guid":{"rendered":"http:\/\/astan.lk\/al_virtualclassroom\/?p=5341"},"modified":"2019-02-16T09:55:11","modified_gmt":"2019-02-16T04:25:11","slug":"economic-systems-using-different-criteria","status":"publish","type":"post","link":"https:\/\/astan.lk\/al_virtualclassroom\/economic-systems-using-different-criteria\/","title":{"rendered":"Economic systems using different criteria"},"content":{"rendered":"<p>The economic system consists of: consumers, producers, government and industrial organizations<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>Each and every system purchases goods and services in order to satisfy human needs<\/li>\n<li>There is a coordination mechanism among these sectors<\/li>\n<li>It has developed various conventions, traditions, laws and regulations and norms for the function of the mechanism.<\/li>\n<li>Some sectors control the other sectors in order to maintain the sustainability of the mechanism<\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\"><strong>A few shapes could be found in the coordinating mechanism as follows\u00a0<\/strong><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">Traditions<\/span><\/li>\n<li><span style=\"color: #000000;\">Price Mechanism<\/span><\/li>\n<li><span style=\"color: #000000;\">Command \/ Planning mechanism<\/span><\/li>\n<li><span style=\"color: #000000;\">When allocating scare resource answer the basic economic problems: what to produce in what quantity, how to produce and for whom to produce by the coordinating mechanism<\/span><\/li>\n<li><span style=\"color: #000000;\">The price mechanism provides answers to the basic economic problems based on the profit and the price signal of the goods market and the factor market<\/span><\/li>\n<li><span style=\"color: #000000;\">The planning mechanism provides answers to the basic economic problems concerning the common welfare in general<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\"><strong>The laws and regulations mentioned below exist in each and every economic system\u00a0<\/strong><strong>in order to strengthen the economic process<\/strong><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">Legal framework<\/span><\/li>\n<li><span style=\"color: #000000;\">Here, freedom of property, freedom of entrepreneur, freedom of choice are<\/span><br \/>\n<span style=\"color: #000000;\"> specially important.<\/span><\/li>\n<li><span style=\"color: #000000;\">Process<\/span><\/li>\n<li><span style=\"color: #000000;\">Policies Here economic policies and social policies are important<\/span><\/li>\n<li><span style=\"color: #000000;\">Norms and traditions<\/span><\/li>\n<li><span style=\"color: #000000;\">Habits and culture<\/span><\/li>\n<\/ul>\n<p>Any society face basic economic problem generally.<br \/>\n\u2022 Different economic systems occur as the result of solving these basic economic problem.<br \/>\n\u2022 These economic systems can be categorized as Market economy, Command economy and Mixed economy.<br \/>\n\u2022 Market economy is termed as a Capitalist economic system or a Free enterprise economic system, alternatively.<\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\"><strong>The main characteristics of a Market economy can be explained as follows<\/strong><\/span><\/h3>\n<p>&nbsp;<\/p>\n<ul>\n<li>Private ownership of property<\/li>\n<li>Free enterprise and freedom of choice<\/li>\n<li>Competition and free market<\/li>\n<li>\u00a0Function of a price mechanism<\/li>\n<li>Self interest and profits<\/li>\n<li>limited role of the government<\/li>\n<li>A price mechanism functions as the coordinating mechanism of solving basic economic problems in the market economy.<\/li>\n<li>The basic economic problems of what and how much to produce is solved in the Market economy by the price signals of the good market.<\/li>\n<li>The basic economic problem of how to produce is solved in the market economy by the signals of the factor market.<\/li>\n<li>In the market economy , individual income is decided by two factors such as , price of factors of production in the factor market and exchange of quantity for the price<\/li>\n<li>The price mechanism does the following functions in the market economy<\/li>\n<li>Signaling function<\/li>\n<li>Incentive function<\/li>\n<li>Allocation function<\/li>\n<\/ul>\n<p><strong>There are some disadvantage also in the market economy such as,<\/strong><\/p>\n<ul>\n<li>Inefficient allocation of resources.<\/li>\n<li>Failure to provide public goods and merit goods.<\/li>\n<li>Externalities.<\/li>\n<li>Occurrence of economic disparities.<\/li>\n<\/ul>\n<p>Command economic system is explained as an economy where the basic economic questions are solved by the centrally planned authority.<br \/>\n<strong>The main characteristics of a Command economic system can be explained as\u00a0<\/strong><\/p>\n<ul>\n<li>Government owns all the factors of production except labour.<\/li>\n<li>Basic economic problems are solved by a centrally planed authority under<br \/>\nthe guidance of the government.<\/li>\n<li>Competition and free market<\/li>\n<li>Function on social welfare<\/li>\n<li>A centrally planned authority decides on what and how much to produce andinforms production units.<\/li>\n<li>A centrally planned authority decides on how to produce. production units are the<br \/>\ngovernment entrepreneurship and incentives are decides according to the orders of a centrally planed authority.<\/li>\n<li>For whom to produced is decided according to the price of factors of production<\/li>\n<li>Because of the disadvantages of Command economic systems, these economic systems have been transited to Market economy.Examples: Russia, China and eastern European countries<\/li>\n<li>Most characteristics of Command economic system and Market economic systems are mixed up and mixed economies occur in most countries<br \/>\nExample: Sri Lanka, India and Pakistan<\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\"><strong>The Following characteristics can be seen in a Mixed economic system.<\/strong><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">Public ownership of property<\/span><\/li>\n<li><span style=\"color: #000000;\">Private freedom limited.<\/span><\/li>\n<li><span style=\"color: #000000;\">The decisions regarding allocating resources of society is taken by the<\/span><br \/>\n<span style=\"color: #000000;\"> government or is centrally planed by authority.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The economic system consists of: consumers, producers, government and industrial organizations &nbsp; Each and every system purchases goods and services in order to satisfy human needs There is a coordination mechanism among these sectors It has developed various conventions, traditions, laws and regulations and norms for the function of the mechanism. Some sectors control the [&hellip;]<\/p>\n","protected":false},"author":842,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,2679],"tags":[],"class_list":["post-5341","post","type-post","status-publish","format-standard","hentry","category-economics","category-unit-1-en"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Economic systems using different criteria - Learning &amp; Education Portal<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/astan.lk\/al_virtualclassroom\/economic-systems-using-different-criteria\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economic systems using different criteria - Learning &amp; Education Portal\" \/>\n<meta property=\"og:description\" content=\"The economic system consists of: consumers, producers, government and industrial organizations &nbsp; Each and every system purchases goods and services in order to satisfy human needs There is a coordination mechanism among these sectors It has developed various conventions, traditions, laws and regulations and norms for the function of the mechanism. 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