What is a mixed economic system?
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What is a mixed economic system?
A mixed economic system is a blend of a market and a planned economy where individuals, firms, and the government own factors of production and distribute goods and services.
What questions must be asked in order to determine the type of economic system in a country?
The three key questions that have to be answered in every economy are:
What to produce?
Who to produce for?
How to produce?
Define the term market failure.
Market failure occurs when there is a less than optimal allocation of resources from society's point of view.
True or False?
A government intervenes to correct market failures.
True.
A government intervenes to correct market failures.
How do governments earn revenue?
Government revenue is earned through taxation, proceeds received from privatisation, the sale of licences, and the sale of goods and services.
State the aim of promoting equity.
The aim of promoting equity is to reduce the opportunity gap between the rich and poor.
Why do government's support firms?
Government's often support firms so as to help them remain globally competitive.
Why does the government support poorer households?
The government supports poorer households so as to reduce the impact of poverty. Taxation takes money from the rich and passes it on to the poor in the form of benefits.
Which are the four most commonly used methods of government intervention in markets?
The four most commonly used methods of government intervention in markets are:
Indirect taxation,
Subsidies
Maximum prices
Minimum prices
State two other methods of government intervention.
Other methods of government intervention include:
Regulation
Nationalisation
Privatisation
The state's provision of public goods
What is the purpose of government intervention with regard to public and merit goods?
The purpose of government intervention with regard to public and merit goods is to influence the level of production or the rate of consumption.