Economic System, factors and consumers society

Categoria:Economia Aziendale


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There are three types of economic system:
1. Free Market Economy: in a free market system all decisions regarding the production of goods and services are made by the citizens of a country with very little interference from the government. The market laws of supply and demand dictate which goods and services are produced. On the negative sides, the wealthier sectors of society hold most of the economic and political power.
2. Centrally Planned Economy: All decisions regarding the production of goods and services are made and controlled by the state. Government officials decide what goods to produce, how to produce them, to whom they should be distributed and at what price they should be sold.
3. Mixed Economy: This is a combination of two systems. In most area, citizens are free to set up businesses to produce goods and services. The mixed system have the disadvantages of both the free market and centrally planned system.
The factors of production are: “ Land, labour, enterprise and capital”.
1. Land: refers to the natural resources available in a country;
2. Labour: refers to the people available to assist in the production of goods and services;
3. Enterprise: is the act of bringing together elements of land, labour and capital to develop with a view to making a profit;
4. Capital: refers to the money invested to run a business.
We have basic needs to survive: food and drink, shelter and clothing but we have also an unlimited numbers of wants. Our needs and wants create the opportunity for business.
To keep the economy turning, businessmen continually invent new “wants”. When a product is successful, designers try to add new features that will make people want the newer model.
We live in a consumers society where the consumption of mass-produced goods is encouraged through mass communication.
»Alino» Economic system, Factors of productions, 21-11-2005
The consumers society