Mixed Economy Flashcards
What’s an ‘economy’?
It’s a system that attempts to solve the basic economic problem
What’s the ‘Private Sector’?
It’s the provision of goods and services by businesses that are owned by individuals or groups of individuals
What’s the ‘Public Sector’?
government organizations that provide goods and services in the economy
Who are the ‘Shareholders’?
They are the people or organizations that own shares in a company
What’s a ‘dividend’?
It’s a part of a company’s profit that is divided among the people with shares in the company
What are ‘assets’?
things or resources belonging to an individual or a business that has value or the power to earn money
What are ‘liabilities’?
It’s the amount of debt that is owed or must be paid
What is ‘market failure’?
It’s where markets lead to inefficiency
What’s a ‘mixed economy’?
It’s an economy where goods and services are provided by both the private and the public sectors
What are merit goods?
goods that are under-provided by the private sector
What are public goods?
goods that are not likely to be provided by the private sector
Who is a ‘free-rider’?
an individual who enjoys the benefit of a good but allows others to pay for it
What is ‘privatization’?
It’s the act of selling a company or activity controlled by the government to private investors
What are the main aims of owners in the private sector?
The main aims of owners are survival, profit maximization, growth, and social responsibility.
How do businesses in the private sector differ in ownership and control?
- sole traders are owned and controlled by one person
- partnerships are owned and controlled by two or more people working together
- companies are owned by shareholders who elect a board of directors to run the business.
What are some advantages of growth for firms?
Advantages of growth include higher future profits, job security for workers, and benefits for other stakeholders
Explain the concept of social responsibility for firms.
Social responsibility refers to firms aiming to please a wider range of stakeholders, including governments, media, environmentalists, local residents, consumers, and workers
What are the main aims of public sector organizations?
The main aims are improving the quality of services, minimizing costs, allowing for social costs and benefits, and, in some cases, making a profit.
How do public sector organizations differ in ownership and control?
Public sector organizations are controlled by government departments, public corporations, or local authorities, and their key policies are determined by the government
Explain how a mixed economy addresses the basic economic questions of what to produce? how to produce? and for whom to produce?
In a mixed economy, decisions are made by both consumers and the state, with the private sector providing goods based on demand and the public sector providing goods that may not be adequately supplied by the private sector due to market failure.