Economics Anaylisis

(522)
 MBA Level


Equilibrium and
Economy of Scale of Mix
Economy
  


 By Yasir Mehmood
 Roll No. AD513997

 Equilibrium and Economy of
Scale of Mix Economy


EQUILIBRIUM
 

Economic equilibrium is simply a state of the

world where economic forces are balanced and

in the absence of external influences the
(equilibrium) values of economic variables will
not change. It is the point at which quantity
demanded and quantities supplied are equal.
 Equilibrium and Economy of
Scale of Mix Economy
 EQUILIBRIU
M

SUPPLY DEMAND PRICE

5 25 10
10 20 15
15 15 20
20 10 25
25 5 30
 Equilibrium and Economy of
Scale of Mix Economy
 EQUILIBRIU
5
M
10


15

20
(PRICE)

25

30

35

0 5 10 15 20 25 30 35
(Supply & Demand)
 Equilibrium and Economy of
Scale of Mix Economy


ECONOMIES OF SCALE
 

Economies of scale, in microeconomics, are the

cost advantages that a business obtains due to

expansion. They are factors that cause a
producer’s average cost per unit to fall as scale
is increased. An economy of scale is a long run
concept and refers to reductions in unit cost as
the size of a facility, or scale, increases.
 Equilibrium and Economy of
Scale of Mix Economy


CAPITALISM/MARKET ECONOMY
 

Capitalism which is also called market economy is

total private ownership, which means that private

people and business own by the land and property.
The government play a very small role in business
while the owner have complete control of their own
affairs and make all their own decisions regarding
what to produce, how to produce. In market
economy there is great competition in between
producer and shopkeepers. As a result of this
competition there is a great verity of goods in the
shops..
 Equilibrium and Economy of
Scale of Mix Economy


SOCIALISM/PLANNED ECONOMY
 

Socialism which is also called planned or command

economy is totally government ownership, which

means that government and business own by the
land and property. The public play a very small role
in business while the government has complete
control for its affairs and make all its own decisions
regarding what to produce, how to produce. This
type of economic system was operated in all
country of which were under a communist regime,
however it is now very rare.
 Equilibrium and Economy of
Scale of Mix Economy


MIX ECONOMY
 

The mixed economy refers to such an economic

system wherein two the sector exist and function

for achieving national objectives. The two sectors
are the public sector and private sector. Both these
sectors exist and function for achieving national
objectives. Both these sectors make the economic
system of the country. In fact the mixed economy is
the happy combination of private enterprise with
government enterprise on the one side there is
freedom of enterprise, private ownership and profit
earning. On the other side there is government
guidance and control so as to stop evil economic,
pressures.
 Equilibrium and Economy of
Scale of Mix Economy


EXAMPLES OF MIX ECONOMY

 

The U.S. economic system is based more on

capitalism, whereas the Chinese system is

based more on socialism. Most other countries,
including Canada, rely on both market and state
and so are considered to have mixed
economies. Within the mixed economies, the
role of state in the former socialist economies is
still significantly higher than in the other
economies.
 Equilibrium and Economy of
Scale of Mix Economy


ADVANTAGES OF MIX ECONOMY

 

The advantages of a mixed economy are

many.  Depending on the ratio of capitalistic elements to
socialist or mercantile elements, there are many
freedoms in a mixed economy.  People may go into
business for themselves, decide what they will produce
or sell, and set their own prices.  Business owners and
merchants pay taxes, but they reap the benefits of those
taxes through social programs, roads and other
infrastructure elements, and other government services.
The mixed economy is helpful in increasing national
production in the country. Both public and private sectors
work hard to bring about more production. The problems
created by free enterprise and too much public control
are solved through mixed economy. It provides freedom
of enterprise ownership and profit earning as well as
social welfare and political freedom. And all the national
recourses are utilized under mixed economy
 Equilibrium and Economy of
Scale of Mix Economy


DISADVANTAGES OF MIX ECONOMY

 

Mixed economy is half way house. It is not helpful in

achieving optimal use of national resources. The

mixed economy suffers from the drawbacks of both
the capitalism and the socialism. Mixed economy
seldom achieved progress. It suffers from continues
back wardress. Under mixed economy wastage of
different types occurs in the economy. However,
mixed economies also have disadvantages,
including the fact that business people need to find
their own markets for products, and that they are
not in control of the taxes they pay.  Merchants will
often complain of tax rates being too high for the
services provided. 
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