Difference betweeen Capitalist, Socialist and Mixed Economy

Last updated at Dec. 16, 2024 by

There are 3 types of Economies-Capitalist's, Socialist and Mixed

Differet types of Economy-Capitalist,Socialist and Mixed Economy - Teachoo.JPG

What are the 3 main economic decisions in any country?

3 Main economic decisions are

  1. how to produce
  2. What to produce
  3. For whom to Produce

Answer to these economic Decisions depend upon whether we are Capitalist, Socialist or Mixed

3 Main Economic Decisions What Why and Whom to produce - Teachoo.JPG




Economic Decision 1 - What to produce ?

Economic Decision of What to Produce in Capitalist,Socialist and Mixed Economy - Teachoo.JPG

Economic Decision 2 - How to produce ?

Economic Decision of How to Produce in Capitalist Socialist and Mixed Economy - Teachoo.JPG

Economic Decision 3-For whom to Produce

Economic Decision of For whom to Produce in Capitalist,Socialist and Mixed Economy - Teachoo.JPG

Summary - Capitalist ,Socialist and Mixed Economy

Difference between Capitalism Socialist and Mixed Economy - Teachoo.JPG

What is Capitalist Economy/Society?

Definiton

It is an Economy in which means of Production are owned and controlled by Private Sector

 

Which goods are Produced?

Those goods produced which are in Demand

How goods are Produced-Machine or Labour

Whatever is More Profitable

If labor cheaper than new machine, labor used

If machines cheaper, then machine used

 

How Goods be distributed amongst people?

On Basis of Purchasing Power

More goods will be produced for Rich as they have more Purchasing Power. Less goods for Poor

 

Example

USA

 

What is Socialist Economy/Society?

Definiton

It is an Economy in which means of Production are owned and controlled by Government

 

Which goods are Produced?

Government decides goods as per needs of society

 

How goods are Produced-Machine or Labour

if govt feels that there is more unemployment,

it will use labor more

if govt feels that there is labour shortage

it will use machine more

 

How Goods be distributed amongst people?

On Basis of What People Need

(Govt may decide to give free goods to all ,

it doesn’t matter whether they are rich or poor

 

Example

North Korea, USSR

 

What is Mixed Economy/Society?

Definition

It is an Economy in which means of Production are owned and controlled by both Government and Private Sector

 

Which goods are Produced?

Market produced those goods that it can produce well

Government produces essential goods which Market fails to Produce

 

How goods are Produced-Machine or Labour

Market Makes What is Profitable

Govt makes what society needs

 

How Goods be distributed amongst people?

Private Sector Makes Goods on Basis of Purchasing Power

Government Sector on basis of needs of society

Example

India

 

MCQ Other Books

Question 1

In the following questions, select the correct answers:

Capitalist Economy is controlled and operated by:

  1. Private Sector
  2. Public Sector
  3. Both (a) and (b)
  4. Neither (a) nor (b)
View Answer

 

Question 2

_______ Economy is the economy in which means of Production are owned, controlled an operated by the

government.

  1. Mixed
  2. Socialist
  3. Capitalist
  4. None of these
View Answer
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Transcript

Types of Economy Capitalist Economy Means of Production Controlled by Private Sector Private Example USA Socialist Economy Means of Production Controlled by Govt (Public) Example USSR (Now Russia) Mixed Economy Means of Production Controlled by Govt and Public Both Example India3 Main Economic Decisions in any Country How to produce? What to produce? For Whom to Produce? CAPITALIST ECONOMY MIXED ECONOMY SOCIALIST ECONOMY There are 3 Main Economic Decisions What to Produce? How to Produce? For whom to produce? (How Goods and Service Distributed Among People? Answer to these questions depends upon Type of Economy- Capitalist, Socialist or Mixed What to Produce? Luxury Train (for Rich) Ticket Rs 200000 General Trains (For Poor) Ticket Rs 20 Capitalist Economy Goods which are in Demand and will earn More Profit Socialist Economy Goods which Society Needs Mixed Economy Market Produces those goods which will be more profitable Govt Produces Essential Goods which Market doesn’t produce How to Produce-Labour or Machine? Construction using Labour Construction using Machine Capitalist Economy Whatever is Profitable If Using Machine Saves Cost, Machine used If labour cheaper then labour used Socialist Economy What Society Needs Labour used more in case of unemployment Mixed Economy Market Makes What is Profitable Govt makes what society needs For Whom to Produce? (How Goods & Services distributed amongst people) Example-Where should a Doctor open Clinic ? Clinic in Village Clinic in City Capitalist Economy On Basis of Purchasing Power of Customer (more profitable to open in cities) Socialist Economy On Basis of What People Need (More Medical clinics may be required in villages) Mixed Economy Private Sector-> Makes Goods on Basis of Purchasing Power (Cities) Government Sector --> on basis of needs of society (Village) Difference between Capitalism Socialist and Mixed Economy Who Owns Means of Production What to produce? How to Produce (Labor or Machine) How goods Distributed Among People Example Capitalist Private Sector Goods which are in More Demand Earn more Profit Whatever is Profitable (Saves Cost) As per Purchasing Power USA Socialist Govt As per needs of Society What Society Needs USSR, North Korea Mixed Both Both Both India

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Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo