1.5 the mixed economy

Question 1

mixed economy

Answer 1

It involves both private (businesses) and public (government) sectors to aid resource allocation through the market mechanism.​

Question 2

private sector

Answer 2

organisations that are owned by individuals and are driven by profit. The profit from private sector organisations benefits the owners, shareholders and investors. They are financed by private money from shareholders and by bank loans.​

Question 3

public sector

Answer 3

are owned by the government. They provide goods and services for the benefit of the community. They are run by the government and operate with money raised from taxes.​
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Question 4

market failure

Answer 4

an inefficient distribution of goods and services in the free market. In market failure, the individual incentives for rational behavior do not lead to rational outcomes for the group. ​
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Question 5

Why does the government have to intervene the market failure ?

Answer 5

1. To provide public goods e.g. army, hospitals, police​
2. To provide under-provisioned merit goods e.g. education

Question 6

privatisation

Answer 6

Privatization describes the process by which a piece of property or business goes from being owned by the government to being privately owned.​