what are the merits and demerits of capitalist economy

Hey Sheril,

In Capitalist economies, the production activities are fully controlled, organised and managed by the private entrepreneurs. The sole motive of undertaking the production process is to earn and maximise profits.

Merits of Capitalist Economies:

1. Efficient: Under this set up, maximum efficiency is ensured due to competitive environment. The producers who are able to minimise the cost and are able to secure a larger section of market are able to survive in the market.
2. Speedy Growth of Economy: With efficiency in the production, there is a fast growth rate of output also it act as a catalyst in the economic development and increase the material well being of an individual.

Demerits of Capitalist Economies:

1. Inequalities of Income Levels: In the capitalist economy, there is an unequal distribution of income among different sectors of an economy. More emphasis is given to the demands of rich section over poor section. Such practises are regarded unethical from the social, economic and political point of view.
2. Misuse of the constructive resources: In these economies, the resources are allocated to those projects, where the capitalist can earn the maximum returns. Social welfare is somehow ignored by this system, which generally results in misuse of the resources of the economy for self needs.

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1) capitalist economy  give appropriate service and timely predualisence.

2) it gives better option to people to choose within.

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