Free Market Economy

Mixed Market Economy

Free Market Economy

• An economic system based on supply

and demand for goods and services,
with little to no government control
involved in its operation.
Characteristics of Free Market Economy

• Free to set prices • Free to create capital formation

• Free, Cooperative, and Peaceful • Free to earn profits

Process • Free to compete
• Free to choose your work • Free to buy, own, use, and sell
• Free to be an investor private property

• Free to be an entrepreneur
Benefits and Drawbacks of a Free Market
Economy
• Benefits

1. Freedom to innovate

2. Customers drive choices

• Drawbacks of a Free Market

1. Dangers of profit motives

2. Market failures
Mixed Economy

• Refers to the market economy where both private and public

enterprises participate in economic activity.
Characteristics of a Mixed Economy
• It safeguards private property
• It permits prices to be determined by the free market and the principles of
supply and demand
• It is motivated by the self-interest of people
• It enables the government to protect both the people and the market
• The government plays a significant part in the military, foreign trade, and
domestic transportation.
Advantages of a Mixed Economy
• Promote innovation to meet customer needs in the most cost-effective
way.

• Balance between individual freedom and social responsibility.

• Ensure that basic needs such as healthcare, education, and housing are
met for all citizens.

• Mixed economies also provide social safety nets for those who are unable
to work or in need of assistance.
Disadvantages of a Mixed Economy

• Excessive Taxation

• Government Monopolies

• Ineffective Regulation