Alternative to mixed in key
The government also takes care of the less competitive companies and disadvantaged individuals. In a mixed economy, government intervention can support these key industries, such as education, defense, and aerospace, through subsidies or ownership. Private companies might neglect some industries that are essential or bring social welfare because of their low profitability. The public sector in a mixed economy alleviates the disadvantages of a free market. Customers can receive the best value for what they paid for. Companies are thus motivated to allocate capital to achieve innovation and efficiency of production. In a free market with competition, the enterprises that can produce more efficiently are rewarded with higher profits. Incentives for innovation and production efficiency Hence, customers’ needs can be better met. Resources are allocated efficiently to where they are needed the most in the private sector. Benefits of a Mixed Economic SystemĬombining the features of a market economy and a command economy, a mixed economic system carries advantages from both sides 1. A pure command economy or market economy only exists theoretically. The mixed economic system is the most common and practical system in modern society. Some essential industries, such as national defense, public transportation, and package delivery, are partially publicly owned. are dominated by private enterprises with a certain level of government intervention, such as agricultural subsidies and financial regulations. The United States follows a mixed economic system. Through providing public goods and collecting taxes, the government can create more social welfare. It simultaneously allows the government to intervene in some economic activities and industries. There is a certain level of economic freedom so that the private sector can decide the use of capital and seek profits. In a mixed economic system, the private sector and public sector co-exist. Cuba and North Korea are some of the few countries with a command economy. Production and sales of goods are determined by the government. In a command economy, on the other side, the government regulates the market or owns the key industries. The market ( supply and demand) determines the prices of goods and services, as well as the allocation of resources. In the market economy, private enterprises are free to set up businesses and make profits. The advantages of a mixed economy include efficient production and allocation of resources, as well as improvement of social welfare.Ī mixed economic system takes on both the characteristics of a market economy and a planned economy.In a mixed economic system, free markets co-exist with government intervention, and private enterprises co-exist with public enterprises.A mixed economic system synthesizes the elements of a market economy and the elements of a command economy.