1.1.5 The Mixed Economy

Question 1

What is the mixed economy?

Answer 1

This is the economic system in which there are both public and private sectors

Question 2

What is the private sector?

Answer 2

This is the sector in which businesses are owned and run by private individuals, its traits are:

1. Owned by Private individuals/shareholders
2. Goals are for-profit
3. Answers The production questions by customers.

Question 3

What is the public sector?

Answer 3

This is a sector run and owned by the government, its traits are:

1. Run and Owned by Govt
2. Uses tax revenue
3. Produces for the benefits of the country’s citizens

Question 4

What is Market Failure?

Answer 4

Market Failure is when resources are not allocated efficiently. This can include under produced products, over produced products, wrong investments etc. It is also the failure to take into account all costs and benefits. Some producers are negligent on external costs, causing market failure.

Question 5

What is the socially optimum output?

Answer 5

This is where social costs = social benefits.

Question 6

Why do governments intervene for market failure?

Answer 6

They do so to reduce the overall social costs, to make sure that the country is running at maximum efficiency

Question 7

What are some government intervention methods?

Answer 7

1. Subsidies and Indirect Taxes
2. Competition Policy
3. Environmental Policies
4. Regulation
   
   1. Nationalisation/Privatisation
   2. Direct Provision

Question 8

What are some government intervention methods?

Answer 8

1. Subsidies and Indirect Taxes
2. Competition Policy
3. Environmental Policies
4. Regulation
5. Nationalisation/Privatisation
6. Direct Provision

Question 9

What are the traits of public goods?

Answer 9

non-excludability and non-rivalry.

non-excludability is the inability from stopping an individual from consuming the product.

non-rivalrous is that one person consuming the product doesn’t stop another.

Causes the free rider problem

Question 10

What are some public goods?

Answer 10

1. Policing
2. Healthcare
3. Public Transportation
4. Public Companies

Question 11

What is Privatisation?

Answer 11

Privatisation is the selling of a public company to the private sector.

Question 12

How does privatisation affect stakeholders?

Answer 12

Government: Gets Revenue

Businesses: Gain competition

Consumers: Price increases, quality increases, may change

Workers: Become redundant, anxiety over job security