The table compares key features of different economic systems. Feature Market economy Planned economy Mixed economy Resource allocation Price mechanism Gove...
Question 1 Report
The table compares key features of different economic systems.
| Feature | Market economy | Planned economy | Mixed economy |
|---|---|---|---|
| Resource allocation | Price mechanism | Government planning | Both |
| Ownership | Private | State | Both |
| Profit motive | Strong | Weak/absent | Moderate |
Answer Details
The correct answer is the profit motive influencing business decisions.
In both market economies and mixed economies, private firms exist and are driven by the desire to earn profit. The profit motive encourages firms to produce goods and services that consumers want, to innovate, and to keep costs low. In a planned economy, the state owns the means of production and decisions are made by central planners rather than by profit-seeking firms, so the profit motive is weak or absent.
State ownership of all major industries is a feature of planned economies, not market or mixed ones. Central government allocation of all resources also characterises planned economies. A complete absence of private enterprise would mean no profit motive at all, which contradicts both market and mixed systems.
Download The App On Google Playstore
Everything you need to excel in your exams
