Question

1. Sketch a spectrum or continuum with “All government” on the left side and “No government” on the far right. Place Market, Socialist, Command and Capitalist economies in the correct order.

Answer 1

We are asked to rank four different types of economic systems - Market, Socialist, Command and Capitalist. For ease of presentation, consider 'All Government' to be on the top and 'No Government' on the bottom. Ranking will be made numerically, with a lower rank meaning greater closeness to 'All Government'.

All Government

1. Socialist - This is an economic system based completely around public ownership of means of production. The state is also responsible for centrally planning all economic activity. Hence, this is the system with the greatest amount of government intervention.

2. Command - This is an economy where the government decides which goods and servies are to be produced, instead of the free market. Therefore, the government 'commands' the productive process. It is a less extreme version of socialism, thus having lower amount of government intervention.

3. Capitalist - This is a system defined by private ownership of property, encouraging corporate competition and motive to generate profit. It requires a low level of government intervention.

4. Market - Also known as a Laissez Faire system, it is an economy based completely around the market laws of demand and supply. The economy is allowed to function according to the free market, and has little to no government intervention.

No Government