ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 1


ECO2210
ECONOMIC PRINCIPLES AND ISSUE

Course code : ECO2210
Section : 8AC1
Title : Individual Assignment 1
Students name : Beng Putra
Student I/D : I12001388
Lectures name : MR SEYED MOHAMAD MEHDI TASALOTI
Date of submissions : 23/09/2013


Year: 2013/2014
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 2

TABLE OF CONTENT
1. INTRODUCTION 3
1.0. DEFINITION 3
1.1. ECONOMIC QUESTION PROBLEM ALL ECONOMIC FACE 4
1.2. FACTOR OF PRODUCTION OF ECONOMY SYSTEM 5
1.3. THE FUNCTION OF FOUR QUESTION OF THE ECONOMIC SYSTEM 7
1.4. THERE HAVE 5 MAIN TYPES OF ECONOMIC SYSTEM 8
2. CONTENT 9
2.1. THE GENERAL ESSENTIAL CHARATERISTIC OF MIXED ECONOMY 10
2.2. THERE ARE 5 CHARATERISTIC OF FEATURES OF MIXED ECONOMY 11
2.3. OWNERSHIP OF RESOURCES OF THE MIXED ECONOMY 12
2.4. ALLOCATION RESOURCE OF MIXED ECONOMY SYSTEM 13
2.5. ROLE GOVERNMENT OF MIXED ECONOMY SYSTEM 14
2.6. GOALS AND POLICES SYSTEM OF MIXED ECONOMY SYSTEM 15

ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 3

2.7. ADVANTAGES OF MIXED ECONOMY 15
2.8. DISADVANTAGES OF MIXED ECONOMY 17
3.0. CONCLUSION 17
REFERENCES LIST 18











ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 4

1.0 DEFINITION
Economy system is a blend of the rules or ways into a single unit and used
to achieve economy with objectively. To cover the purpose entire processing and
society action in effort to need reach their necessary. It refers to the role or
model of distribution and production which take place in the society.
1.1. ECONOMIC QUESTION PROBLEM ALL ECONOMIC FACE



We must make Choice about:



We choose 5 economy systems with determine which are:


Limited resources
Scarcity
Unlimited Wants
1. What to produce good and service?
2. How to produce goods and service?
3. for whom to produce goods and service?
4. How to distribution produce goods and services?
Traditional
economy system
Market economy
system
Command
economy system
Mixed Economy
System
Islamic Economy
system
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 5

Scarcity is a perpetual problem facing society due to limited resources and
unlimited wants and needs satisfied with these resources. Scarcity means that
society does not have enough of everything resources for everyone wants and
needs (anualweb, n.d).

Two Components
Consider the two sides of the scarcity problem:
1. Unlimited Wants are this is a basic characteristic of humanity which
means that people are never totally satisfied with the quantity and variety of
goods and services. It means that people never get enough, that there is always
something else that they would want or need.
2. Limited Resources: This is a basic condition of nature which means that
the quantities of available resources used for production are limited. It means
that the economy has only so many resources that can be used AT ANY GIVEN
TIME. Time to produce other goods and services.



ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 6

1.2. FACTOR OF PRODUCTION OF ECONOMY SYSTEM
1. Land All the natural resources on the land, in addition to the land itself.
Any improvements people have made to the land.
2. Labor The mental and physical efforts of human workers. The process of
making things requires labor.
3. Capital Human-made resources used to make products or deliver
services. Capital has 2 kinds of production:
1. Physical capital all the tools, machines, and other equipment a
business needs.
2. Human capital the skills and knowledge of a companys workers.

4. Entrepreneurship A person who starts and manages a business. they
take a risk by investing money in a new business in the hope of earning a
profit. Without entrepreneurship, the other resources cannot be used
efficiently and productively.



ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 7

1.3. THE FUNCTION OF FOUR QUESTION OF THE ECONOMIC SYSTEM:
1. What to produce Goods and services?
To deciding what goods and services are to be produced and in what quantity.
This involves the allocating of scarce resources in relation to the composition
of total output in the economy. It is to see that goods and service and
produced in accordance with the availability of resources and in what quantity
and thus, allocation of resources depend upon the administration.
2. How to produce Goods and Services?
To deciding how to produce goods and services with what combinations and
what method of production. This method is primarily dependent upon the
available resources within the economy. It deals with utilizing the most
efficient process to produce the goods and services.
3. for whom to produce goods and services?
To deciding about distribution of goods and services produced in their final
form and determined through needs of individual through their contribution
towards the production process.
4. How to should be distribution goods and services? (Additional point)
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 8

Depending on distributor which economic process making such as goods and
services call production. How producers to distribute which goods and services
are produces to consumers to making consume become prosperous.
1.4. THERE HAVE 5 MAIN TYPES OF ECONOMIC SYSTEM:
1. Traditional Economy system: a system where tradition customs and society
beliefs shape the goods of products with creates by them. Where the
Countries that use this type of economic system are at rural and farm-
based or in old era.
2. Market Economy system: a system where the people decided made
through the market mechanism which the forces of demand and supply,
without any government, interference, determine how resources are
allocated as called free enterprise or free market.
3. Command Economy system: a system where the government makes
decision all economic market, production, and allocated to consumers. This
is a great deal of planning economies tend to be run by the government, in
theory , the government want to see greater economic equality between
consumers.
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 9

4. Mixed Economy system: a System where some goods and services are
produced in the free-market sector of the economy, but others are
produced by the state or government.
5. Islamic Economy system: an economic systems where people studies the
economic problems of filled with the values of Islamic.
2.0. DEFINITION OF MIXED ECONOMY
A "mixed" economy is a mix between socialism and capitalism. Mixed
economy is a system economy mix between market economy and a centralized
system, which the government and the private sector interact in solving economic
problems by combination. The capitalist system and the socialist system which
took middle line between freedom and control that means absolute line between
the role of state and individual prominent role. A mixed economy occurs when
both the private sector and the state direct the economy. Many countries follow
this economic structure. Countries that have a mixed economic system include
the United States of America, United Kingdom, Australia, Japan, Germany,
Canada, Italy, South Africa, Slovenia, Mexico and Malaysia even in Indonesia
also using this mixed economy structure.
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 10

Three questions of a mixed economy system:





2.1. THE GENERAL ESSENTIAL OF CHARATERISTIC OF MIXED ECONOMY:
1. The means of production are owned and controlled by private sector as
well as the government.
2. The people decides on economy activities within the economy
3. The combination of the best features of capitalist and command
economies are observable in the market
4. The problem of distribution goods and services, allocation of economic
resources are determined through a combination of the market and
governmental laws and policies .


ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 11

2.2. THERE ARE 5 CHARATERISTIC OF FEATURES OF MIXED ECONOMY
1) Public sector: all decision regarding what, how and for whom to
produce is taken by the state. Public utilities such as road construction, power
supply, water supply are in the side of public sector. These public utilities are
operating for societal welfare maximization not for profit motives.
2) Private sector: There is private sector in which production and
distribution of goods and services are carried out by private enterprise. Profit
motive is the guiding principle in this sector.
3) Joint sector: there is joint sector where both state and private jointly
run enterprise. It is organized on the basis of a joint stock company where
majority of shares are held by the state.
4) Freedom and control: in mixed economy there is every freedom to own
private property, earn profit, to consume, produce, distribute and to have any
occupation of choice without limitations until unless such possessions have an
adverse effect on public welfare so that state intervenes in order to control and
regulate the situation.
5) Economic planning: There is a central planning authority in a mixed
economy. In this system, economy operates on basis of some economic plan. All
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 12

sectors of economy function in accordance with the objectives, priority and
targets laid down in the plan.
2.3. OWNERSHIP OF RESOURCES OF THE MIXED ECONOMY:
Private ownership of land and capital is an important element of the free
enterprise system and the essential features of a mixed economy. Under an
independent company, individuals are free to own property and carry out their
own work. A mixed economy defends capitalist economic elements but also
allows some government ownership of industry. Private ownership rates and free
enterprise differ across different economic mix. U.S. emphasizes free enterprise
while other countries nationalize certain industries, such as utilities,
transportation and energy. Moreover, business personal property in a mixed
economy may be required to comply with various government regulations. Even
communist China's economy includes a number of features that suggest that the
market can be considered as a mixed economy; albeit one that retains many of
the features of the socialist planned economy. Watch the Website Economic eyes
that the Chinese government reforms have resulted private business in the
manufacturing and services sectors (ehowco, n.d).

ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 13

2.4. ALLOCATION RESOURCE OF MIXED ECONOMY SYSTEM
In a mixed economic system with combining the governments plan to use
the free market. An important feature of a mixed economic system and that the
private issuer that has ownership of the resources, as well as free market, they
have the freedom to determine the allocation of their resources. In order to
produce, determine the production of goods and services to produce based on
price signals with the ultimate goal to maximize the benefits of how much.
However, mixed economic system, with the goods, they are different from the
free market economic system with some scarce to produce services that thinks
their country into the public sector and the government, people, and need to be
willing. And products and services are goods and services, as examples of goods
and services as a public benefit and injection defense and education, and street
lighting. By controlling the use of certain resources and ownerships, high
unemployment, when the national government, that to build a factory to create
jobs for people to use the resources you can. Furthermore, it is possible to
provide services or goods to the poor governments do not have the ability to pay
needs to use its resources (Economicgrumble, 2012).

ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 14

2.5. ROLE GOVERNMENT OF MIXED ECONOMY SYSTEM
In a mixed economy, the governments besides public sector play an
important role in the economic life of the state through the revenue and
expenditure measures of its budget. The important functions are:
(i) Allocation function:
Government provides public goods such as defense, public administration,
and other that different from personal belonging. These items cannot be
delivered through in market mechanism. But, it is necessary for the user and
so the government has given them. The Government has allocated resources
among the personal belongings and public goods.
(ii) Distribution function:
Through taxes and government spending affect the basic personal income
distribution house in a fair way. So, their taxes will be the rich and shop for
projects that benefit poorer.
(iii) Stabilization function
The country's economy is affected by economic fluctuations, such as
depression and explosion conditions. The changes are, virtues and other
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 15

hazards. This is required by the government policy measures that can affect
the fit in this case, the overall level of demand. It's called the actions and
measures to stabilize. The purpose of this step is to avoid the conditions of
unemployment and inflation.
2.6. GOALS AND POLICES SYSTEM OF MIXED ECONOMY SYSTEM
A basic level is the pursuit of economic to purpose mixed economy by using
different basis. There have 5 basics to aim such as: a public, full employment,
stability, economic growth, efficiency and fair. Governments bear the primary
responsibility, pursuing 5 objectives of economic policy to help: the user, control
and regulate voluntary exchange market. Elected officials, government agencies
set up, management and law through Congress, the decision of the court to the
actions taken by the rule: take the basic form (amosweb, n.d).
2.7. ADVENTAGES OF MIXED ECONOMY:
In mixed economy, both the government and the private sector jointly
control the economic structure. There are numerous advantages of a mixed
economy.
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 16

1. Provide fair competition: with the presence of private companies to
ensure that there has fair competition in the market, the quality of products and
services are not interrupted.
2. The market price arranged with both the Government and the regulatory
bodies which ensure that market price does not exceed the actual price.
3. Optimal utilization of national resources In a mixed economy, resources
are used as efficiently as well the government and private companies take
advantage of them.
4. People were given more powers: People generally have more say when it
comes to quality, the price of products and services.
5. A mixed economy system is not allowed a totally monopoly: prevent a
few sector, mixed economy does not allowed monopoly because government and
private company to enter any business sector.
Mixed economy is helping to increase national production. Both public and
private sectors are working hard to bring more production. Problems created by
free enterprise and public control too much solved through a mixed economy. It
gives company the freedom of ownership of productive social welfare benefits
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 17

and political freedom. All national resources are used in a mixed economy.(blurtit
, n.d).
2.8. DISADVETAGES OF MIXED ECONOMY:
1. Government within several the case of very influential in the economy,
engineering change policy interest rates, taxes and the money supply in an effort
to reach the target.
2. In several countries the economy is driven by the private sector, with
those who are responsible for overall economic growth, at a time of instability,
and because changes in their respective markets, unemployment, inflation and
recession.
3. Some sectors of the economy operating as a monopoly, whether they are
run privately or by the government. It monopoly stand a greater risk of being
inefficient, which could result in higher prices for consumers.
4. This economic system can be difficult to know how much the
government should intervene, for example, discretionary fiscal policy can create
problems such alternative government loans.
5. Mixed economy which was criticized by the Socialist to let market forces
too much, causing imbalances and inefficient allocation of resources.
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 18

Mixed economy is a half-way house. This does not help in achieving optimal
use of national resources. Mixed economy suffers from a lack of both capitalism
and socialism. Rarely mixed economic progress. It had kept back wardness. In a
mixture of different types of economic waste occurs in the economy (blurtit, n.d).
3.0. CONCLUSION
In mixed economy, they have advantages and disadvantages of mixed
economic which has chance in certain time. Also Mixed economy has goods
characteristic that we can produce free market and free sector but in other hands,
we still under control by the government about the high taxes that we must do
payment it. for defects prevent discrimination and the specific steps can be
completed works efficiently in the public sector, to eliminate the shortages. Thus,
the private sector can also improve work efficiency, control and direction. By
following these steps, fiscal savings and the real economic instability can be
removed.





ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 19

REFERENCES LIST
1. Amosweb, n.d, definition scarcity.[online] available:
At<http://www.amosweb.com> [accessed September 19, 2013]
2. ehow, n.d. Features mixed economy system. [Online] available:
At<http://www.ehow.co.>[accessed September 19, 2013]
3. Economicgummies, 2012. Allocation resource. [Online] available:
At<http://economics-gummies.blogspot.com> [accessed September 19,2013]
4. Preservearticle, n.d. main economic functions of a modern government in a
mixed-economy. [Online] available:
At< http://www.preservearticles.com> [accessed September 19, 2013]
5. Princeton, n.d. definition mixed economy. [Online] available:

At<http://www.princeton.edu> [accessed September 20, 2013]

6. Microserve, 2013. Economy system. [Online] available:
At<http://www.s-cool.co.uk/a-level/economics/free-market-v-command-
economies/revise-it/theoretical-economic-systems> [accessed September 20,
2013]
7. Wisegeek, n.d. disadvantages of a mixed economy. [Online] available:
At<http://www.wisegeek.com/what-are-the-disadvantages-of-a-mixed-
economy.htm> [accessed September 20, 2013]
ECO 2210[ECONOMIC PRINCIPLES AND ISSUE] 8AC1

ECO2210 Page 20

8. Benefitandadvantages , n.d. advantages of mixed economy. [Online] available:
At<http://benefitsandadvantages.com/general/advantages-of-mixed-
economy.html> [accessed September 21, 2013]
9. Economichelp, n.d. advantages and disadvantages mixed economy. [Online]
available:
At<http://www.economicshelp.org/blog/glossary/mixed-economy/> [accessed
September 21, 2013]
10. Blurtit, n.d. advantages and disadvantages of mixed economy. [Online]
available:
At<http://www.blurtit.com/q917361.html> [September 20, 2013]
11. Wizznotes, 2013. Advantages and disadvantages of mixed economy. [Online]
available:
At<http://wizznotes.com/economics/production-economic-resources-and-
resource-allocation/economic-systems> [accessed September 20, 2013]
12. Importanceofphilosophy, n.d. definition mixed economy. [Online] available:
At< http://www.importanceofphilosophy.com/Bloody_MixedEconomy.html>
[accessed 19 september ,2013]
13. Economicsonline, n.d. three question picture of economy system. [Online]
available:
At<http://www.economicsonline.co.uk/Competitive_markets/Economic_systems.
html> [accessed 19 September, 2013]