Answer to Question #302349 in Microeconomics for ainin

Question

1.    Write an account of Katrina’s (a Russian – socialist country) visit to Malaysia (mixed          economy / capitalism), imagine her visiting Mid Valley or any shopping centre in KL, on  a shopping excursion. How would she describe her experience?

Based on your knowledge of command / socialist economy, describe her experience (comparing Malaysia & Russia) when shopping here.

 

You may use any of the criteria’s below to make your comparison:

       i.    Ownership of factors of production

      ii.    Incentives

      iii.    Scarcity / choice

      iv.    3 basic economic questions – what, how, for whom to produce 

Answer 1

All production factors are owned by the government. Low levels of inequality and unemployment, as well as the common good replacing profit as the major motivation for production, are all advantages of the command economy. The government owns all of the resources and decides how to allocate them. The government decides on three essential economic questions: what to create, how to produce, and for whom to produce.

Her experience:

I was granted a once-in-a-lifetime opportunity for everyone living in my nation: the opportunity to go to another country. I went shopping in Mid Valley Shopping Centre in Kuala Lumpur, Malaysia. I had my first taste of shopping in a mixed market economy as soon as I stepped off the Rapid KL LRT subway. I entered Icon Fashion, a little store near the metro, and was instantly taken aback by the lack of customers and the calm and organized manner in which they went through the store. I proceeded to the back of the store to look for some pants, but I had no trouble deciding on Dressing Paula.

I spotted two or three pairs that I liked, but due to the exorbitant price, I chose to purchase only one. After comparing pricing at a few places, I discovered that the ones I had first looked at were the lowest. If I have one pair, I might be able to obtain a 50% discount on another pair. With this as an incentive to buy, I bought two pairs, one for half the price, and went to the bank to get additional money. The banking system was extremely well-managed, user-friendly, and effective. While talking with one of the distributors of factors of production, I learned that in this mixed market economic system, customers are the ones who essentially determine the price, with the government pushing things like the usage of green energy.