Free market economies are likely to produce more pollution, which is bad for the environment. Command economies can make sure that the production processes that they chose are as environmentally friendly as possible. They should be able to make sure that the level of output is the socially optimal level of output.

I would prefer to live in a free market economy as it is superior to an order economy since all their financial choices are taken by people and firms to keep their best interests in mind. They can likewise deliver need merchandise that get most extreme benefit.

A free market economy is a market system whereby the pricing of goods and services is primarily determined by the sellers and buyers, and is hence based on demand and supply. On the other hand, a command economy is an economy whereby the market system is fully controlled by the government.

In a command economy, the government determines what is produced, how it is produced, and how it is distributed. Command economy advantages include low levels of inequality and unemployment, and the common good replacing profit as the primary incentive of production.

Five Characteristics of a Command Economy

• The government creates a central economic plan.
• The government allocates all resources according to the central plan.
• The central plan sets the priorities for the production of all goods and services.
• The government owns monopoly businesses.

A command economy is where a central government makes all economic decisions. Either the government or a collective owns the land and the means of production. It doesn’t rely on the laws of supply and demand that operate in a market economy.

There are three main types of economies: free market, command, and mixed. The chart below compares free-market and command economies; mixed economies are a combination of the two….Types of Economies.

Economic systems can be categorized into four main types: traditional economies, command economies, mixed economies, and market economies.

Capitalism is the world’s greatest economic success story. It is the most effective way to provide for the needs of people and foster the democratic and moral values of a free society.

This module introduces the three major economic systems: command, market, and mixed.

Characteristics of a Free Market

• Private ownership of resources.
• Thriving financial markets.
• Freedom to participate.
• Freedom to innovate.
• Customers drive choices.
• Dangers of profit motives.
• Market failures.

A free market is one where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system, without government intervention. A key feature of free markets is the absence of coerced (forced) transactions or conditions on transactions.

Disadvantages Of A Free Market Economy

1. Poor Quality. Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically.
2. Merit Goods. Goods and services that are not profitable will not be produced or run.
3. Excessive Power of Firms.
4. Unemployment and Inequality.

Advantages of Free Market Economy

• Efficient Allocation of Resources. The free market allows for supply, demand, and prices to all work in tandem.
• Competition.
• Innovation and Economic Growth.
• More Choice.
• Absence of Red Tape.

Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade. Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.

The opposite of a free market economy is a planned, controlled, or command economy.

Free market, an unregulated system of economic exchange, in which taxes, quality controls, quotas, tariffs, and other forms of centralized economic interventions by government either do not exist or are minimal.

While a market economy has many advantages, such as fostering innovation, variety, and individual choice, it also has disadvantages, such as a tendency for an inequitable distribution of wealth, poorer work conditions, and environmental degradation.

The advantage of a free market economy is that when it works, it can both reward and perpetuate innovation and hard work. A disadvantage of free market economies is that they are inherently more risky and thus tend to favor those who start out with more capital and resources.

3 Disadvantages of a Market Economy

• Competitive disadvantages. A market economy is defined by cutthroat competition, and there is no mechanism to help those who are inherently disadvantaged, such as the elderly or people with disabilities.
• Lack of optimization.
• Wide social and economic gap.

Critics of a free market economy claim the following disadvantages to this system: A competitive environment creates an atmosphere of survival of the fittest. This causes many businesses to disregard the safety of the general public to increase the bottom line.