Coupon Accepted Successfully!


Forms of Economic Systems

Capitalism: Individual or few individuals are the owners of the means of production, who invest the capital and are engaged in production.

Advantages: Quality, prices under control due to competition.


Disadvantages: Inequality, differences between management and labours, social exploitation.


Socialism: This system is against the principles of capitalism. It stands for a society of equality where there will be no difference between the owners of production and the labourers. The philosophy was forwarded by Karl Marx.


Advantages: Betterment of society through introduction of equal sharing of resources and abolition of difference of economic status in the society. No competition; the profit goes to the government. Private ownership of means of production is not there.


Disadvantages: Loss and burden for industries. Since there is assurance of basic needs of the workers, they usually become irresponsible and lazy.


Mixed economy: In this economic system, both the private sector and state intervention control the economy, reflecting characteristics of both market economy and planned economy.

Economic Development of Nations

Developed: A developed country is an industrialized country that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations.
Developing: It is also called a less-developed country (LDC). These nations are characterised by a lower standard of living, underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.
Underdeveloped: These nations are marked by a wide gap between the rich and the poor population. There is a disparity in the balance of trade. Some of the characteristics of underdevelopment are shortage of job opportunities, health care, drinkable water, food, education and housing.
Basic Problems of Economic Systems:
  1. What to produce?
  2. How to produce?
  3. For whom it is to be produced?

Test Your Skills Now!
Take a Quiz now
Reviewer Name