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Economics IGCSEPDF 45
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• Taxes will be imposed, which will raise prices and also reduce work incentive.
•both the public and the private sector exists
•planning and final decisions are made by the govt. while the market system can determine
allocation of resources owned by it, along with the public organizations.
In a mixed economic system, both the market and government intervention co-exist.
Examples include almost all countries in the world (India, UK, Brazil etc.). This is because it
overrides all the disadvantages of both the market and planned (govt. only) economies. It
identifies the importance of the price mechanism in operating an efficient resource allocation
and also the role of the government in correcting (any) market failures.
• The govt. can provide public goods, necessities and merit goods. The private businesses can
provide profitable and most-demanded goods (luxury goods, superior goods). Thus, everyone is
provided for.
•The govt. will keep externalities, monopolies, harmful goods etc. in control.
•The govt. can provide jobs in the public sector (so there is better job security).
•The govt. can also provide financial help to collapsing private organizations, so jobs are kept
secure.
of living (1).
• Less (government) spending on healthcare (1) more can be spent on other priorities e.g.,
education (1).
• Cleaning up pollution may create jobs / employment (1) reduce unemployment (1) may attract
MNCS (1) increase in incomes (1) reduction in poverty (1).
• Recycling of some of the material collected (1) could increase the country's output (1) less use
of
non- renewable resources (1).
• Better working conditions (1) productivity of labour could increase (1) reduce costs of
production
(1) increase output (1) reduce unemployment (1) reduce inflation (1).
• Improve the environment (1) Increase tourism (1) increase exports of services (1) improve the
Reduction in ocean pollution (1) will improve fish stock (1) improve quality of fish (1) greater
current account position (1).
Catches of fish (1) leading to rise in incomes / revenue / GDP (1).
Features:
Advantages:
Disadvantages:
Mixed Economic System