Market, planned and mixed economies

Market

• allocation of resource is determined by the forces of supply and demand

• market forces dictate quantity of production and consumption

• price is dependent upon supply and demand

• wealth is held individually rather than collectively

Planned

• allocation of resource is determined centrally by government

• prices are fixed centrally for both resources and production

• prices are not therefore the result of the forces of supply and demand

• individuals own items of personal property but …

• ... real wealth is held by government (central or regional)

Mixed

• as the name suggests, it incorporates elements of both market and planned economies

• resource allocation and production are determined by a mixture of factors

• government decisions (both direct and indirect)

• private sector decisions

prices are affected by supply and demand

but are also affected by government actions such as taxation and subsidies

wealth is split between the individuals in society and the government

the legal and political system affects the balance: market systems rely mainly on private law, planned systems on public and administrative law, and mixed systems use both