Q :- In recent year many countries have moved from planned economies to

market economies. Why do you think this has occurred can u envision a
situation that would cause a resurgence of planned economy?

Planned Economy or Socialism:-

Planned economy is also sometimes called a command economy. The most

important aspect of this type of economy is that all major decisions related to
the production, distribution, commodity and service prices, are all made by the
government. A Planned Economy is run from a Government Office. They have
offices which set the price and production of such things like Orange Juice, Tea
leaves etc another name for such an organized economy is called Socialism .
The planned economy is government directed, and market forces have very
little say in such an economy. This type of economy lacks the kind of flexibility
that is present in a market economy, and because of this, the planned economy
reacts slower to changes in consumer needs and fluctuating patterns of supply
and demand. On the other hand, a planned economy aims at using all available
resources for developing production instead of allotting the resources for
advertising or marketing.

Market Economy Or Capitalism(Open Market Economy):-

Market Economy or Capitalism is that economic system in which capital flows

freely in the society and finds its way to production and distribution in the
private sector with the minimum interference of the government. Its all factors
of production are in the private sector. This type of Economy is based on
buyers and seller, all they do is interact with each other and they have rights
of controlling the prices & government have least control to those free state
economy makers. In this system the buyer & seller has total freedom on making
any decision or choices & even they have the best part of doing Advertising and
Marketing of there product.

Reasons Why Countries switching from Planned to Market Economy:-

The main reason for switching from planned to market economy is that the
government cannot react fast enough to make changes. And that non-dynamic
type of economy creates a whole host of problems. That is why these days
countries moving from planned economy to market economy. This makes a real
boost in economy & in this type of economy there is more flexibility given by
government to individuals.

The Factors that make countries to move on market economy are:

1. Minimum government restrictions

2. Competition
3. Free economy

4. Consumer status

5. Survival of the fittest

6. Professional management

7. Natural price mechanism

Situations that would cause the resurgence of planned economy:-

Planned economy could come back in case of a war or major disaster that
requires all productive forces working towards same goal. You cannot do it for
too long because you fall behind free-market economies in terms of standard of
living, meaning a shortage of consumer goods, then basic necessities.

My Personal views about Both Economies:-

My personal views about both economies are different although both sectors
play an important role in the economic decision-making of the country. But I
recommend Market Economy. The Market (which is made up of all the people)
dictates the price of goods and services through their economic voting power
where there individuals are free to pursue their own interest without
government restrictions.