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- Market Economy or Capitalistic Economy: A market economy is an economic system where two forces, known as supply and demand, direct the production of goods and services. Market economies are not controlled by a central authority (like a government) and are instead based on voluntary exchange.
Features
- Competition among sellers
- Private ownership of resources
- Motive: Profit generation
- Price determination based on market forces
- No (or minimal) government interference
What is a market?
· A market is a place where parties can interact to facilitate the exchange of goods and services.
· The parties involved are usually buyers and sellers.
· It helps in arriving at price level for the commodities getting sold or bought.
- Non-market Economy or Planned Economy: It is also a type of socialist economy. Under this, allocation of goods, services and resources are determined through government intervention. There is no presence of market forces to arrive at price level.
Features
- Strict Government control on production process
- Focus on production and resource allocation and not consumption
- Mixed Economy: It combines the features of both the systems – market as well as planned economy. A mixed economy accepts private ownership of resources and permits economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.
Features
- Government intervention in resource mobilisation from surplus to deficit
- Space for private economic activities and resource control
- Profit generation but also keeping social goals in mind
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