ࡱ>   + !"#$%&'()*,-Root Entry( Jr@ ~ MatOST `} @ ~ MMMN0=  !"#$%&'()*+,-./0123456789:;>?@ABCDEFGHIJKLMNOPQRSTUWNDTuS&TbT=,VT VT&Arial=,VT VT&Verdana=,VT VT&Verdana=,VT ZT  ZT  ZT  ZT   \TkTkTkTB fTeTeTeTeTeTeTeTeTeTeT eTMatadorObject0( Jr ~  ~ MMMN0Ole < eT eT eT1$oTPTgTtA.8A.8#TA.8&% Market economyCommand economy (CPE)&Who owns factors of production?#Private sector (individuals)Public sector (state)What to produce?%What consumers want (= demand)0Government determines what consumers needHow to produce?6As cheaply as possible (profit-motive of firms)JGovernment plans what factors of production are needed and how muchFor whom to produce?QGoods are rationed by price ie. for those who are willing to pay the priceRPrices are centrally fixed so that all can buy these goods -> excess demandAdvantagesz- Freedom of individuals -> high degree of competition -> efficiency and productivity (profit motive) & innovations\- Low prices and inflation (all can afford to buy consumer goods except luxury goods) @- Low taxation because of limited government intervention- Full employment  (- Great equality between citizensDisadvantages[- At micro level (= households & firms) lack of public goods & other market failures6- Complex planning mechanisms -> risk of errors   - At macro level (= whole society) economic fluctuations -> unemployment -> reduced output -> increased inflation/deflationE - Lack of competition -> low quality of goods (& inefficiency)    5 - Factors of production are inefficiently used    > - Reduced motivation to work because of few commodities    " - No freedom of individuals        PPlanning may be useful when a country is either underdeveloped or in war.                                                uS $'  6A.8, ,(%t6RTMatOST ~  ~ OlePres000 OlePres001\CompObjVU) #PCL5MSHP DeskJet 850CLPT1: /,Vf 32 "--   6  "Arial- ) 8 2ee222bb2--2\\2''22YY22!!22! ! 2V V 2! ! 2! i! iD! D2! 2"Verdana(- 2 mkDgMarket economy(,-#2 HF2gCommand economy ,,,2 5HF2g(CPE)-2 i iiWho owns /)2  iifactors of 2  iiproduction?"Verdana(-"2 imkiDPrivate sector  2 m kiD(individuals)    -+2 iHFi2Public sector (state) -2 iWhat to /2 5iproduce?-"2 mkDWhat consumers *)"2 5mkDwant (= demand)"")-2 H F2Government !)#2 5HF2determines what ) " 2 hHF2consumers need)-2 idHow to #)2 idproduce?- 2 mkDdAs cheaply as  2 m kDdpossible   &2 mkDd(profit-motive of  ) 2 4mkDdfirms) )-%2 HF2dGovernment plans !) #2 HF2dwhat factors of ",2 HF2dproduction are needed  2 4H F2dand how much")-2 f fi/For whom to ),2 fi/produce?-,2 fmkfD/Goods are rationed by ! )2 mkfD/price ie. for those   .2 mkfD/who are willing to pay "" 2 m kfD/the price -+2 fHFf2/Prices are centrally   ,2 HFf2/fixed so that all can   (2 HFf2/buy these goods -> "2 H Ff2/excess demand)-2 1 1i^Advantages!-2 1m k1D^- Freedom of ))2 dmk1D^individuals -> high    " ,2 mk1D^degree of competition )  &2 mk1D^-> efficiency and "  +2 mk1D^productivity (profit    +2 0mk1D^motive) & innovations)   -%2 1HF12^- Low prices and " 22 dHF12^inflation (all can afford    #2 HF12^to buy consumer ))2 HF12^goods except luxury  2 HF12^goods)-"2 `mk`D)- Low taxation " (2 mk`D)because of limited  ) 2 m k`D)government )2 m k`D)intervention  -%2 `HF`2)- Full employment ) )-%2 +HF+2- Great equality ! #2 ^HF+2between citizens"  -2  i[Disadvantages#-)2 mkD[- At micro level (= )   ")2 mkD[households & firms)   ).2 mkD[lack of public goods &  +2 +mkD[other market failures) -(2 HF2[- Complex planning )   ,2 HF2[mechanisms -> risk of ) )" 2 HF2[errors-)2 ]mk]D- At macro level (= )  ""2 mk]Dwhole society) "  ,2 mk]Deconomic fluctuations )   (2 mk]D-> unemployment -> ") )"&2 )mk]Dreduced output -> "2 \m k]Dincreased (2 mk]Dinflation/deflation     -,2 ]HF]2- Lack of competition )  &2 HF]2-> low quality of " " ,2 HF]2goods (& inefficiency)   -/2 HF2#- Factors of production  ,2 HF2#are inefficiently used    -+2 %HF%2- Reduced motivation )  .2 XHF%2to work because of few ""2 H F%2commodities))  -#2 HF2# - No freedom of )2 H F2# individuals    -#2 Z HFZ 2# Planning may be   ),2 HFZ 2# useful when a country  "2 H FZ 2# is either  +2 HFZ 2# underdeveloped or in   2 & HFZ 2# war."<,V" 2 "--Ӵ   "Arial- A   QQeeyy>>>s>s > >"Verdana(- 2 vt !Market economy     -#2  !Command economy     2  !(CPE) -2 " "sRWho owns   2 2 "sRfactors of    2 B "sRproduction?   "Verdana(-"2 "vt" RPrivate sector 2 2v t" R(individuals)-+2 " "RPublic sector (state)-2 SSsWhat to   2 cSsproduce?   -)2 SvtS What consumers want   2 cv tS (= demand)  -2 S  SGovernment  #2 c Sdetermines what    2 s Sconsumers need -2 sHow to  2 sproduce?   -.2 vt As cheaply as possible &2 vt (profit-motive of  2 vt firms) -%2  Government plans  #2  what factors of ,2  production are needed 2   and how much  -2  sFor whom to   2 sproduce?   -,2 vt Goods are rationed by )2 vt price ie. for those .2 vt who are willing to pay  2 v t the price-+2  Prices are centrally ,2  fixed so that all can (2  buy these goods ->  2   excess demand -2  sfAdvantages  -2 v t f- Freedom of  )2 vt findividuals -> high  ,2 &vt fdegree of competition  &2 6vt f-> efficiency and  +2 Fvt fproductivity (profit +2 Vvt fmotive) & innovations  -%2  f- Low prices and  22  finflation (all can afford ,2 & fto buy consumer goods  )2 6 fexcept luxury goods)-"2 gvtg - Low taxation  (2 wvtg because of limited  2 v tg government  2 v tg intervention-%2 g g- Full employment  -%2  - Great equality  #2  between citizens -2  s Disadvantages   -)2 vt  - At micro level (=    )2 vt  households & firms)   .2 vt  lack of public goods &  +2 vt  other market failures -(2   - Complex planning   ,2   mechanisms -> risk of   2   errors-)2 vt  z- At macro level (=    "2 vt  zwhole society) ,2 *vt  zeconomic fluctuations  (2 :vt  z-> unemployment ->     &2 Jvt  zreduced output ->  2 Zv t  zincreased (2 jvt  zinflation/deflation-,2   z- Lack of competition  /2   z-> low quality of goods   #2 *  z(& inefficiency) -/2 { {- Factors of production ,2  {are inefficiently used-+2  - Reduced motivation  (2  to work because of  "2  few commodities  -#2  - No freedom of   2   individuals-.2  ?Planning may be useful  &2  ?when a country is ,2  ?either underdeveloped 2 /  ?or in war.  Different economic systems   "#'{w{s{  "%'qq :u ''MOMO"'00 Times New Roman Verdana A.8A.8, ( JrMicrosoft Works MSWorksWPDoc9q