NUR AISYAH BINTI MOHD HANIFIAH

52101314327

1. Explain the Capitalism and Command Economies economic

systems. In your opinion which economic system should be
followed and why?

Capitalism1. Firms will produce anything that people will buy. The market determines
quantities sold and prices.
2. Produce goods based on what consumers demand.
3. Only those who are willing (and able) to pay the market price will gain
access to societys goods.
4. Private individuals and firms own resources. Property rights apply
intellectual property through patents and copyrights.
Command1. The government largely determines what is produced and in what
amounts. It directs producers to make and deliver goods and services in
specified amounts.
2. Try to produce what people want and need, in the quantities and at the
time required.
3. The people (in the form of the state) own the means of production. The
state, which is seen to embody the will of the people, decides what will be
produced according to a plan based upon what the state calculates to be
people's need and desire for various goods and services.
4. Government ownership of the means of production. In command
economies, governments will own some or all of firms producing goods.
Government pricing and production decisions. In a command economy,
production is decided by government agencies, who decide the most
socially efficient goods to produce. Government agencies may also set
prices or give consumers rations directly.
In my opinion, capitalism, in many respects, is a good system. It allows talented,
ambitious people an outlet for their abilities, and it weeds out inefficiency. With
capitalism, more choice is provided than ever before and you know exactly what
youre getting due to the statistics on the packet. Capitalism gives anyone with a
work ethic, talent and good idea a chance to make something of themselves.

2. What is the difference between oligopoly and monopoly?

Meaning

Monopoly
An economic market
condition where one
seller dominates the
entire market.

Prices

High prices may be

charged since there is
no competition

Characteristics

A single firm controls a

large market share in
the industry, thereby
gaining the ability to
set price.
A monopoly usually
exists when barriers to
entry are very high either due to
technology, patents,
distribution overheads,
government regulation
or capital-intensive
nature of the industry.
Market making ability
by virtue of being
virtually the only
viable seller in the
industry.
Microsoft (Operating
systems, productivity
suites), Google (web
search, search
advertising), DeBeers
(diamonds), Monsanto
(seeds), Long Island
Rail Road etc.

Barriers to
entry

Sources of
Power

Examples

Oligopoly
An economic market condition where
numerous sellers have their presence
in one single market. A small number
of large firms that dominate the
industry.
Moderate/fair pricing due to
competition in market. But much
higher than perfect competition
(where there is a large number of
buyers and sellers)
A small number of firms dominate
the industry. These firms compete
with each other based on product
differentiation, price, customer
service etc.
Barriers to entry are very high as it is
difficult to enter the industry because
of economies of scale.

Market making ability because of

very few firms in the industry. Each
firm can therefore significantly
influence the market by setting price
or production quantity.
Health insurers, wireless carriers,
beer (Anheuser-Busch and
MillerCoors), media (TV broadcasting,
book publishing, movies), etc.