Mixed Economy

Question 1

Definitions

Answer 1

Mixed economy: economy
economy: system that attempts to solve the basic economic problem

private sector: provision of goods and services by businesses that are owned by individuals or groups of individuals

public sector government: organisations that provide goods and services in the economy

shareholders: people or organisations that owns shares in a company

Dividend: part of a company’s profit that is divided among the people with shares in the company

assets: things or resources belonging to an individual or a business that has value or the power to earn money
liabilities: amount of debt that is owed or must be paid

Question 2

Ownership and control private sector

Answer 2

Goods and services in this sector are provided by businesses that are owned and controlled by individuals or groups of individuals. In many countries, most consumer goods, such as groceries and consumer durables are provided by the private sector. Private sector
enterprises can vary in size and type of ownership. They may be:

sole traders: where the business is owned and controlled by one person

partnerships: where the business is owned and controlled by two or more people working together.

companies: where shareholders own the business. They elect a board of
directors to run the business on their behalf. These vary in size.

Question 3

Private sector aims

Answer 3

A minority of businesses are large but contribute enormously to the provision of goods and services
Some are multinationals, which means they have factories and other operations all over the world.
AIMS
in the private sector, the aims of firms are likely to be determined by their owner . The main aim of most owners is to make a profit. However, ane,
of other aims need to be considered.
• Survival: When a firm is first set up, many owners will not expect to make profit immediately. It takes time to establish a business and new owners often encounter unexpected difficulties. As a result, the initial aim of a firm might be simply to survive. Survival is also important when trading conditions are difficult.
-Profit maximisation: The owners of most firms are in business to make profit. Economic theory assumes that firms aim to maximise profit where a firm will make as much profit possibly can in a period of time. Companies pay their shareholders a share of the profit through a dividend - shareholders want dividend to to be as high as possible and therefore profit maximisation is an important objective. However, some firms are content to make just enough profit keep the owners satisfied. In a small firm, this might mean that owner does not want to take on the extra responsibility of growth and is content to make a satisfactory profit. In a large company, it might mean that the managers who run the firm make enough profit to satisfy shareholders
Growth: Many firms aim to grow as larger firms +, reducing average cost by exploiting EOS - profits higher in future benefit stakeholders such as workers and managers securing their job. AO4 Problem growth - profit used to finance it shareholders not like as dividends may lower
Social responsibility: aim good corporate citizens. This means they aim to please a wider range of stakeholders. Owing to pressure from the government, the media, environmentalists, local residents, consumers, workers and other interested
parties, some firms are aiming to become more socially responsible.

Question 4

Public sector

Answer 4

Controlled /owned by
Central government departments - armed forces, NHS, department for transport
Public corporations or state owned enterprises - board of directors, separate legal identity they can sue and be sued, state Dundee taxes all assets and liabilities belong to the state, borrow money re-use revenue from sales, usually aim profit
Local authority services - local council recreation library swimming emergency service polic and fire housing
Other public sector organizations

Question 5

Public sector aims

Answer 5

Public sector organisations have different aims from those in the private sector. Without aims, they are likely to deliver poor-quality services and waste resources specific
aims depending on the services they provide.

• Improving the quality of services: Public sector organizations generally aim to improve the standard of their services. Performance indicators may be used to monitor quality. In general, performance indicators might focus on reliability, professionalism, levels of customer service and speed of service
• Minimising costs: Government resources are scarce and it is important that waste is minimised. In the past, public sector organisations have been criticised for being inefficient. As a result, the government is regularly
  looking for ways to cut costs in all areas.
• Allow for social costs and benefits: Since their aim is not to make a profit, public sector organisations are better placed to take into account the needs of a wide range of stakeholders. As a result, when making decisions they
  can take into account externalities
  Profit: in some countries, the government owns a number of large businesses that aim to make a profit.