Organization of Economic Activities

Organization of Economic Activities

Organization of Economic Activities

1. Centralized Planned Economy
2. Market Economy
1. Centralized Planned Economy: –
In this economy, the government or the central government makes plans for all the activities of the economy.
Decisions of production / exchange and distribution / consumption are also made by the central authority in this economy.
This economy carries out communicable tasks for the whole society.
 In case of insufficient production by individuals in the economy, they are motivated by central power. And oneself also has to produce fodder when needed.
 In the event of difficulty in living in the country, the central government gives the deprived class a fair share, such as tax is collected from the competent class and grants are given to the poor from it.
2. Market Economy: –
A market economy is the opposite of a centralized economy; in fact, a market is a system in which people can sell and sell freely.
In a market economy, the prices of goods and services are determined and controlled not by any central authority, but by the market. Such as –
D-P- O-P When the demand for a commodity increases, the price of that commodity in the market increases. And by seeing more profit than this, producers increase the production of the commodity. In the event of more supply, the price again decreases. In essence, the market economy remains in automatic equilibrium without the intervention of any central authority / government.
Summary: – In the real world, a country has neither a centralized economy, nor only a market economy. An economy consists of a mixed economy, in which important decisions are taken by the government and there is an active market participation in economic activities.
A good example of a mixed economy is our Indian economy.