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CHARACTERISTICS
ADVANTAGES
DISADVANTAGES
Private ownership of resources Freedom of enterprise and choices Consumers sovereignty Competition Minimum government intervention Price system
Production according to the needs of consumers Economic freedom Efficient utilization of resources Greater variety of consumer goods Enhanced trade ,business, and research and development (R&D) Automatic incentives flexibility
inequality of distributions of wealth and income inflation and high unemployment rate lack of social welfare unnecessary variety and wasteful competition misallocation of resources social costs
FREEDOM OF ENTERPRISE AND CHOICE Individuals are free to own resources as well as to establish any enterprise of their choice. They are free to trade, invest, and organize to produce within the countrys legal framework. For example, if Ommirul decide to start his own business of providing ticketing service, he has the economic freedom to operate this business as long as it is not against countrys legal framework.
CONSUMERS SOVEREIGNTY In capitalism, consumers sovereignty plays an important role. They has the power and authority in deciding which product should they buy and which are not based on their taste and preferences towards goods and services. This will affect the production of the company. Therefore, producers will have to produce goods and services that meet consumers taste and preferences to avoid loss due to product that has been produce but unable to get through the market.
COMPETITION A market economy is also characterized as being highly competitive among producers who aim to obtain the highest profit. Producers produce product that has high quality with greater efficient method to compete among each other. For example, in the production of electronic devices, Samsung and SONY both put their best effort to attract consumers through various marketing strategies such as applying latest features on their new devices to keep consumers loyalty towards their brands in meantime to maximize sales of their product.
GOVERNMENT INTERVENTION Even though theres a governmental law and regulation that need to be followed in capitalism, the intervention from government is limited due to countrys role in stabilizing the economic conditions of the country.
PRICE SYSTEM Economic decisions were made by considerate the price mechanism which means free operation of demand and supply forces without any intervention. In other words, all economic processes including consumption, production, exchange, savings, investment and distribution, work under this price mechanism system which is also labelled as the invisible hand by Adam Smith.
MICROECONOMY CAPITALISM SYSTEM ECONOMY LECTURER NAME : MISS HERNIZA ROXIANNE MARKUS GROUP : BM1112A3 NAME : MISWARA AYIM STUDENT ID : 2011508011