3 Types of Economy

There are 3 fundamental types of economies- Free Market, Command Economy and a Mixed Economy. In this article I am going to explain each of them and discuss their advantages and disadvantages

Free Market:

A free market economy is an economy where resources are allocated based on the price mechanism aka money which is a medium of value. In simple terms, it means the public sector is solely responsible for the allocation for resources. Although solely free markets dont exist anymore, economies such as the Chinese Economy where 60% of its employment is in the public sector are examples of economies which have a large free market. This means that the private sector and government aren't very influential on the economy and so are separate entities.

Advantages:

• The main advantage of a free market is that it rewards entrepreneurship and filters out products on the market to those are worth the highest value. Furthermore, the entrepreneurship is highlight specialised which as discussed before has its benefits in Division of Labour.
• It is very efficient as because only the best products survive in the market, firms are forced to produce as efficiently and as cost effectively as possible in order to allow themselves to continue to hold market share.
• Because entrepreneurship is…