Question

Importance of quality standard in production processs

Answer 1

Free market economy: Where markets allocate resources through the price mechanism. An increase in demand raises price and encourages businesses to use more resources into the production of that good or service. The quantity of products consumed by people depends on their income and income itself depends on the market value of an individual's work. In a free market economy there is a limited role for the government, indeed in a pure free market system, the government limits itself to protecting property rights of people and businesses using the legal system and protecting the value of money or the value of a currency.

2.Planned or command economy: In a planned or command system associated with a socialist or communist system, scarce resources are owned by the government. The state allocates resources, and sets production targets and growth rates according to its own view of people's wants. Market prices play little or no part in informing resource allocation decisions and queuing rations scarce goods.

3.Mixed economy: In a mixed economy, some resources are owned by the public sector(government) and some are owned by the private sector.