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1. Explain how market capitalism, centrally planned capitalism, centrally planned

socialism, and market socialism differ. Give an example of a country that

illustrates each type of system.

Market capitalism an economic system in which individuals and firms allocate

resources and production resources are privately owned. Simply put,

consumers decide what goods they desire and firms determine what and how

much to produce; the role of the state in market capitalism is to promote

competition among firms and to ensure consumer protection. oday, market

capitalism is widely practiced around the world, most nota!ly in "orth #merica

and the E$.

%entrally planned socialism is a system where the state has !road powers to

serve the pu!lic interest as it sees fit. State planners make &top'down( decisionsa!out what goods and services are produced and in what )uantities; consumers

can spend their money on what is availa!le. Government ownership of entire

industries as well as individual enterprises is characteristic of centrally planned

socialism. *ecause demand typically exceeds supply, the elements of the

marketing mix are not used as strategic varia!les. +ittle reliance is placed on

product differentiation, advertising, or promotion; to eliminate &exploitation( !y

intermediaries, the government also controls distri!ution. he clear superiority

of market capitalism in delivering the goods and services that people need and

want has led to its adoption in many formerly socialist countries. #n ideology

developed in the nineteenth century !y Marx and perpetuated in the twentieth

century !y +enin. or decades, the economies of %hina, the former Soviet

$nion, and -ndia functioned according to the tenets of centrally planned

socialism.

Market socialism, in this system market allocation policies are permitted within

an overall environment of state ownership. -n Sweden, for example, where the

government controls two'thirds of all expenditures, resource allocation is more

&voter( oriented than &market( oriented.

%hina is an example of state'directed socialism. he state controls the market,

however nowadays %hina has given considera!le freedom to !usinesses and

private sector accounts have approximately / percent of national output.

0. hy are *ra2il, 3ussia, -ndia, and %hina 4*3-%5 highlighted in this chapter6

-dentify the current stage of economic development for each *3-% nation.

hese four country markets are especially dynamic and represent important

opportunities for growing. he *3-% nations and other emerging markets are

also home to companies that are challenging esta!lished glo!al giants at homeand a!road. Experts predict that the *3-% nations will !e key players in glo!al

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trade, even as their track records on human rights, environmental protection,

and other issues come under closer scrutiny !y their trading partners.ith a 0//7 G"- per capita of 81,19/, -ndia has transitioned out of the low'

income category and now is classified as a lower'middle'income country.

%ountry leaders opened -ndia:s economy to trade and investment and

dramatically improved market opportunities. -ndia improved its economy !y

eliminating import licensing re)uirements for many products, reducingtariffs, easing restrictions on foreign investment, and li!erali2ing the rupee.

G"- per capita was 8,

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. # manufacturer of satellite dishes is assessing the world market potential

for his products. Ae asks you if he should consider developing countries

as potential markets. Aow would you advise him6

-t would !e a good idea !ecause in many places in south #merica as an

example there is no ca!le connection availa!ility in many places so satellite

dishes market has a great potential.

@. he seven criteria for descri!ing a nation:s economy introduced at the

!eginning of this chapter can !e com!ined in a num!er of different ways. or

example, the $nited States can !e characteri2ed as followsCype of economyC

#dvanced industrial stateype of governmentC =emocracy with a multiparty

systemrade and capital flowsC -ncomplete free trade and part of a trading!loche commanding heightsC Mix of state and private ownership Services

provided !y the state and funded through taxesC Densions and education, !ut

not health care -nstitutionsC ransparency, standards, no corruption, a free

press, and strong courts MarketsC ree market system characteri2ed !y high'

riskhigh'reward entrepreneurial dynamism. $se the seven criteria found on pp.

@/F@1 to develop a profile of Ecuador. hat implications does this profile have

for marketing opportunities in the country6

ype of economyC an emerging economy.

ype of governmentC a democracy !ut the president has the control over the

other powers of the state !ecause he has a ma?ority in each power. #ctually his

party ruled over the others. Everyday we have news a!out conflict !ecause the

president is not open to dialogue with the opposition.

rade and capital flowsC -ncomplete free trade. he government dominates

trade possi!ilities.

he commanding heights4e.g., the transportation, communications, and energy

sectors5C he government has the control.

Services are provided !y the state and funded through taxes like pensions,

health care, and education !ut also private services coexist.

-nstitutionsC many cases of corruption everyday and the government don:t

investigate a!out them. -t only says that is a lie !y opposition. %orruption is a

fact of life and the press is dominated !y the government.

MarketsC mix market, private and pu!lic.