Rationale of Malaysia’s Economic System on Utility Maximization Essay

Words: 2178
Pages: 9

Identification of Malaysia’s Economic System
Malaysia is a democratic country with excellent economic system. We are one the leading country in economic terms and being an example for the economy system we are using. In Malaysia, we are into mixed economy system. This economy system is the leading type of economic system that is used in most of the countries such as United States. Mixed economy system includes a mixture of capitalism and socialism. It combines private economic freedom, centralized economic planning and government regulation. Government plays major role in economic growth as well as distribution of wealth. For example, our government collects tax and provides subsidies at the same time for the public.
The success of
…show more content…
This means the money may be used for social programs or for wars.
The government has control of resource allocation in a mixed economy. During a free-market economy, resources will be given to services that best boost the economy, but a mixed economy gives the majority of resources to social welfare programs. While some people will see this as an advantage, it is a disadvantage for business owners, because they may not get enough resources to create an adequate product or profit.
Another one of the disadvantages to a mixed economy is the amount of freedom business owners have to create a product. While there are legal restrictions on some product types, most products can be made without any such problems. This means business owners must find and create their own market, which can be difficult for some business owners, because of the free-market side of a mixed economy.
Government agencies typically like to keep track of businesses, their earnings and many other aspects of their business practices. This means business owners may experience a lot of paperwork, forms and bureaucracy to get licenses or to legally operate. This is one of the disadvantages of a mixed economy that is hardest for private businesses, because they often experience the most paperwork.

Firstly, prices perform a signalling function. This means that market prices will adjust to demonstrate where resources are required, and where they are not.
Prices rise and fall to reflect scarcities and