Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Disadvantages Of Market Economy

Business , Economics
Main drawbacks or disadvantages of market economy can be highlighted as follows:

1. Wealth Disparity

One of the major drawbacks of market economy is unequal distribution of wealth. It widens the gap between wealthy and poor individuals. Rich people become more wealthier and poor become more poorer.

2. Distorted Investment

Producers invest their capital only in profitable sectors. So, factors of production are not employed adequately in public sectors like education, health, transportation etc. 
disadvantages market economy
3. Workers Exploitation

In market economy, workers are highly exploited by the producers. Bad working condition, no safety measures, long working hours and less wage payment are the major problems of workers.

4. Economic Instability

Because of the lack of control, regulation and supervision, market economy may create uncertainty and instability in the whole economy of the country.

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5. Poor Quality Goods

Main motive of market economy is profit maximization. So, producers can make low quality products to earn more profit.

6. Monopoly

Large producers can dominate the market by eliminating the rival companies. It may create monopoly in the market.
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Advantages Of Market Economy

Business , Economics
Main advantages or benefits of market economy can be highlighted as follows:

1. Increase Business Efficiency

There will be a competition among producers to produce high quality products at lower cost. So, latest technology and modern methods of production are introduced. Therefore, market economy helps to increase business efficiency.

2. Promotes Innovation

It is another notable benefit of market economy. It promotes innovation because producers wants to create new products in order to gain high profit.

3. Consumer Sovereignty

In market economy, products are produced according to the need and demand of the consumers. So, it gives emphasis on consumer sovereignty. 

4. Proper Use Of Economic Resources

Economic resources are properly utilized so that maximum profit can be obtained and wastage can be minimized.

5. Foreign Investment

Market economy helps to bring foreign investment in the country which helps in industrial and economic development of the nation.

                advantages market economy

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6. Freedom Of Choice

Consumers are free to choose and consume the products or services according to their needs, choice and income. Large variety of products are available for all types of people.

7. Fare Competition

It encourages free and fare competition among the producers. 
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