John Manje 14/02037
i) Characteristics of a Capitalist Economy
(i) It is an economic system in which each individual in his capacity as a consumer, producer and resource owner is engaged in economic activity with a great degree of economic freedom.
(ii) The main motive behind the working of the capitalist system is the profit motive. The entrepreneurs initiate production with a view to maximize profits.
(iii) Income is received in monetary form through the sale of services of the factors of production and fro: profits of private enterprise.
(iv) Capitalist economy is not planned, controlled or regulated by the government. In this system, economic decisions and ...view middle of the document...
(ii) Lower Employment Rates: In many socialist economic systems, the desire for equality and the lower efficiency that comes from a planned economy has at least one positive side: high, or even universal, levels of employment.
(iii) Overproduction: free-market economies tend to suffer from overproduction because they tend to be more efficient, meaning that a greater number of goods are produced.
(iv) No guarantee of welfare because business owners are motivated by the desire to make money, it is to their advantage to ensure that their workers are paid as little as possible
(v) Heavy expenses on publicity lead to increases in cost and price of the commodity.
ii) Characteristics of a Planned Economy
(i) All resources are owned and managed by the government.
(ii) There is no consumer or producer sovereignty.
(iii) The market forces are not allowed to set the price of the goods and services.
(iv) Profit in not the main objective, instead the government aims to provide goods and services to everybody.
(v) Government decides what to produce, how much to produce and for whom to produce.
(i) Prices are kept under control and thus everybody can afford to consume goods and services.
(ii) There is less...