Secular Economic System Case Study

The Question:

Which of the three main secular economic systems do you think is the most beneficial to the people today? Support your arguments by highlighting its main principles. If you could suggest improvements to the system, what would they be?

Name: Tau Fong Yee

Matrix number: 178499

Programme: Bachelor of Economics

1.0 INTRODUCTION

An economic system is a mechanism (also defined as system or social institution) which deals with production, distribution and consumption of goods and services in particular system. The economic system is composed of people, institutions and their relationships. The economic system can used to overcome the problem of economics such as the allocation of the resources and the distribution of goods and services. There are

Inequality of wealth and income. ii. Monopoly power gained by firms over consumers and workers. iii. Environmental problems in the long-term which resulted in ignorance of firms that emphasize on maximizing economic income in short term.

2.2 Pros of capitalism

i. Economic freedom helps political freedom which means that can avoid large bureaucracy as governments own the means of production and set prices, it invariably leads to a powerful. ii. Firms in a capitalist will efficiently produce goods which are in demand and put efforts to cut costs and avoid waste to improve productivity and competitiveness. If firms don’t remain productive and efficient they will go out of business. iii. Efficient allocation of resources that indicates that In resources are distributed according to consumer preferences. iv. Higher growth of GDP that leaded by innovation and economic expansion can enhance wealth and promote a higher standard living. In theory, everyone can benefit from this increased wealth, and there is a ‘trickle down effect‘ from rich to poor.

2.3 Cons of capitalism

i. Monopoly power gained by firms can exploit their position to charge higher