Please explain what a mixed,command and market economy is ?

Question

in plain english with real life examples please

Answer 1

A mixed economy is an economic system that incorporates aspects of more than one economic system.

A command (planned) economy is an economic system where supply and price are regulated by the government rather than market forces.

A market economy is a realized social system based on the division of labour where the prices of goods and services are determined in a free price system set by supply and demand.

Answer 2

The definition of a market economy is when firms (businesses if you prefer) determine how many goods and services are to be produced and how much is to be charged for them in markets. This is due to the forces of demand and supply. So to take a basic example McDonalds determine how many hamburgers they will make and how much they will charge. This happens with all the private owned firms across the economy. In reality there is no such thing as a pure market economy. For example governments will always intervene in the economy with police forces, fire services, military etc.

A market economy contrasts to a planned economy where the government determines how much of a good is to be produced and how much is to be charged for it. This happens in Cuba and the former USSR. So in a planned economy they will set a quota for how many jeans are to be produced in a year, then they set the price for what they will be sold at. This happens economy wide. In the USSR they did this using things called Gosplans.

A mixed economy is one where free markets work alongside certain markets which are controlled by the government. This is the most common type of economy. An example would be the UK where whilst the majority of markets are controlled by the forces of demand and supply (therefore free market) there are some with large amounts of government intervention like the National Health Service, the education system and the Royal Mail.

Hope that helps.