|عنوان فارسی مقاله:||محیط اقتصادی کسب و کار: ارائه مقاله|
|عنوان انگلیسی مقاله:||Economic Environment of Business: Essay Handout|
|رشته های مرتبط:||علوم اقتصادی و مدیریت، مدیریت کسب و کار، اقتصاد مالی و اقتصاد پولی|
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is also known as planned economy . in this economy the government has the power over the financial management of the country. Financial decisions like the prices of goods and services, wages rate of the labor and has full command over the resources. The command economy consists of state owned entities as well as privately owned entities that are controlled by the state. (study.com, n.d.). In command the three basic questions what to produce? How to produce? And for whom to produce? is determined by government preferences.
Advantages Command economies provide the economic security to the country as well as have the ability to change with the changing circumstances. this economy has the ability to shift the resources from one industry to another if required. Government is capable of creating a healthy supply of resources by intelligent regulations. In this economy the government adjusts the production rate to meet the demand. The production is increased or decreased according to the specific regions. It is easily responding to the emergency and internal disaster. This economy also inform the government about the needs and the demands of the people according to which prices are kept nominal. (occupytheory.org, 2014)
Disadvantages Command economy limits the economic freedom and provide very less incentive to the hard work. This kind of economy has very less economic efficiency and have not in practice tended to work well. Major disadvantages of this economy is failure of coordination between the planning and the execution of economic decisions pertaining to investment, trade and production. The other disadvantage is misplaced incentives. (occupytheory.org, 2014)
Examples Countries like Cuba ,North Korea and Soviet union are the examples of command economy. In Cuba housing is free but no one can own houses and salaries are controlled by the government and are low and the government has control over the pricing. (study.com, n.d.) Market Economy has several characteristics like in this economy people buy what they want to buy so money becomes necessary and to get money they are forced to sell anything. The main aim is to maximize profit rather than satisfying social needs. Rationing of scarce goods take place through money. (Ollman, oct 1999) .In market economy the decisions regarding investment, production and distribution are based on market determined demand and supply. Government role is to pass laws to protect businessman and consumers. It also provides certain services like police.
Advantages Competition between the firms leads to the effective production without the wastage of resources. Only those goods are produced which have demand and other goods are dropped. Consumers gets a wide variety. Profit rewards are for the producers. This type of economy tend to be more effective than the command and traditional economies as it gives the individual more economic freedom. (WillGema, 2014)
Disadvantages As in this type of economy the main aim is profit the firms may try to misuse the resources like polluting the environment or by exploiting the workers. The firms will not produce the goods that are not in demand due to which the rural communities suffer with the services like transport and post . (survey, n.d.)Another disadvantage of this economy is the misallocation of resources which creates inequality in the incomes, market imperfections and can lead to the encouragement of consumption of harmful drugs. It does not have any economic security as well as the conservation of resources is a big challenge. (ssag.sk, n.d.)
Examples Most of the countries today have a combination of Market economy and Command economy. There are no countries that have purely market economy. According to a study in 2007 The economically free countries are USA, Australia, Hong Kong, and Singapore. In USA companies are allowed to set prices whereas workers negotiate wages but the parameters are established by the government. Hong Kong ranks as 89.3% economically free country which has extremely low tax rates and minimal regulations for business. It is the highest in the world. Where as Singapore ranks 85.7% and Australia 82.7% free economy.