Author: Juan Anthonio Kambuno



    1.   Explain what is meant by a market system!

    Answers:
    An Economic system is a system that used by a country to allocate the resources they have, it can be individuals or by organizations. There is main type of market economic system depending how the government making decisions about the allocation of resources. First is Free Market System, which is all decisions are taken by private sector organizations and individuals. The government is not part of this system. Second is the mixed economy system, there is no free market or planned economics. All decision about the allocating of scare resources is split between the private sector and a public sector. The third is Planned Economic System, which is own and controlled only by government. But there may be few private sectors.

    2.   Discuss when it might be desirable for the government to act as a producer of goods or services!


    Answers:
    The government can act as a public sector producing public goods such as street lighting, sea and flood defenses and national park, but that would be also unprofitable for the private sector. They can also create laws about a harmful product. The amount of goods and services provided by the public sectors can be different between the different of national economics. It depends on how they can allocate their own resources and if there is enough human capital or high technology to build it too.


    3.  Sometimes the government does not act as a producer of goods and services but still influences private sector. Explain how it might do this!

    Answers:
    All market economies have a government that will also decide how best to allocate some scare resources. The governments are controlling all private sector by where the place they are producing, what kind of product they producing and how they produce the product. The governments make laws about the harmful goods illegal or about protecting environment, and high taxes can be imposed on others such as cigarettes, to reduce their consumption. But it may also fail because of low communication and politic unrest.