3 Types Of Economic System Essay

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There are three main types of economic system that have already existed in the 20th century which are command economy, capitalist economy and mixed economy. However, we can relate these three economic systems with government, business and society because they are interrelated to each other. The first economic system is command economy where there is no private ownership of property and the government takes full responsibility for the economy. In this type of economic system, production is not undertaken for profit. The government decides the amount of production and usage that they want which means that the goods and services can be produced in the quantities the government thinks best for the society. Government has the rights to change the price of goods and services. This means that where the production is controlled by a monopoly, customers will not be charged at higher prices in order for the monopoly to obtain higher profits. However one of the disadvantages of this economy is that there is no freedom of choice for producers or consumers. Hence, lack of incentives for workers resulting in low efficiency. Next, the other economic system is capitalist economy where there is no involvement of the government. In this type of economy, there is freedom of choice for the consumers to choose the goods and services that they wanted to buy.…show more content…
The reason why India is a mixed economy is because public & private sector function, their combined efforts lead to rapid of economic growth. Since individuals have right to own private property & law of inheritance is applicable, some people get richer & richer while public sector tries to provide economic facilities to general people, due to which inequality of income is reduced. The planning commission of India makes policies for developing every region of the economy. In this way every region such as agriculture, education etc. is covered for
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