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Eco Assignment

3178 words - 13 pages

Russian Steel |
Economics |
Prepared for Politburo |
By Anatoly Keritsky, CEO of Russian Steel |
11/13/2009 |


Table of contents
Cover Page ………………………………………… 1
Table of contents ………………………………………… 2
Task 1 ………………………………………… 3
Task 2 ………………………………………… 6
Task 3 …………………………………………
Task 4 …………………………………………
Task 5 …………………………………………
Referencing …………………………………………

Task – 1
Resources mean ...view middle of the document...

They can increase the quantity of products according to the demand. They can motivate their employees freely and the rules will be set own by themselves. The producers are free to undertake all the risks and rewards of the increasing in production. The next thing is the price determination can be set up according to the demand and supply. The decision of what to produce, for whom to produce and in what quantities is decided by only with the market forces and not determined by the any other factors. They can perform the individual’s entrepreneurial abilities in the best way. By competitive prices, consumers have chances to get the products in cheap. They can ignore the products which is higher than the other products. They have power of choices. The business owners can produce more innovative products and that can raise the standard of living of the public.

Disadvantages of free market
There is no equilibrium price in the real world, i.e. there is no time when demand and supply are in equal prices. This harms to the people who are in low income. So the poor people cannot afford the things in the free market. Also, the producers do not produce merit goods like education, hospital, housing… so the poor people are deprived of the merits goods and thus the rich people become richer and the poor people become poorer. As the consumers do not want to pay for the public goods like bus stop, garden, street lighting, etc... And moreover those goods are not profitable so the producers do not produce such things. In such way there will be over consumption of disadvantage goods like cigarettes, drugs, alcohol become better selling as the consumers fancy to pay for those goods and those goods are profitable. Environment disaster (air pollution, water pollution, noises and etc.) are being ignored. There may be also wastes of resources because the producers will keen upon only the profit and not for the other things. There will be more rivalries among businesses. In addition there can be monopolistic or oligopolistic in the market. As a result the price of the goods will be only in the hands of the producers. There also can be economic instability.
Command Economy
According to Begg and et al (2003), in the command economy a government planning office decides what will be produced, how it will be produced, and for whom it will be produced. Detailed instructions are then issued to households, firms and workers.
Advantages of Command Economy
In the command economy as the government planned and decides the answers of the questions of what, how and to whom, there will be equality and no private property. If this thing can be done exactly and correctly, there will be no poverty and economic status among people. The rich and poor problem can be solved. Social services will be emphasized with much effort by the government and thus the government can provide equal health care, education opportunities, and make sure all people are fed. As it is owned by the...

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