- A mixed economy is one that both has public and private sectors.
- In an economy decision-makers have to decide what to produce, how to produce and for whom to produce.
- public sector organizations produce services neglected by the private sector. in the private sector groups of individuals are free to produce what they want for those who will buy them.
- Market or free enterprise economy relies least on the public sector most products are provided by the private sector
- Command or planned economy relies entirely on the public sector to distribute, choose and produce goods.
- Mixed economy relies on both the public sector and the private sector to produce goods and services.
- what to produce is determined partly by consumer preferences and partly by the government.
- how to produce is determined partly by producers seeking profit and partly by the government.
- for whom to produce is determined partly by purchasing power and partly by government preference.
Market failure: where markets lead to inefficiency. Externalities, lack of competition, missing markets, lack of information and factor immobility.