Mixed Economy

Question 1

What’s an ‘economy’?

Answer 1

It’s a system that attempts to solve the basic economic problem

Question 2

What’s the ‘Private Sector’?

Answer 2

It’s the provision of goods and services by businesses that are owned by individuals or groups of individuals

Question 3

What’s the ‘Public Sector’?

Answer 3

government organizations that provide goods and services in the economy

Question 4

Who are the ‘Shareholders’?

Answer 4

They are the people or organizations that own shares in a company

Question 5

What’s a ‘dividend’?

Answer 5

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

Question 6

What are ‘assets’?

Answer 6

things or resources belonging to an individual or a business that has value or the power to earn money

Question 7

What are ‘liabilities’?

Answer 7

It’s the amount of debt that is owed or must be paid

Question 8

What is ‘market failure’?

Answer 8

It’s where markets lead to inefficiency

Question 9

What’s a ‘mixed economy’?

Answer 9

It’s an economy where goods and services are provided by both the private and the public sectors

Question 10

What are merit goods?

Answer 10

goods that are under-provided by the private sector

Question 11

What are public goods?

Answer 11

goods that are not likely to be provided by the private sector

Question 12

Who is a ‘free-rider’?

Answer 12

an individual who enjoys the benefit of a good but allows others to pay for it

Question 13

What is ‘privatization’?

Answer 13

It’s the act of selling a company or activity controlled by the government to private investors

Question 14

What are the main aims of owners in the private sector?

Answer 14

The main aims of owners are survival, profit maximization, growth, and social responsibility.

Question 15

How do businesses in the private sector differ in ownership and control?

Answer 15

• 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.

Question 16

What are some advantages of growth for firms?

Answer 16

Advantages of growth include higher future profits, job security for workers, and benefits for other stakeholders

Question 17

Explain the concept of social responsibility for firms.

Answer 17

Social responsibility refers to firms aiming to please a wider range of stakeholders, including governments, media, environmentalists, local residents, consumers, and workers

Question 18

What are the main aims of public sector organizations?

Answer 18

The main aims are improving the quality of services, minimizing costs, allowing for social costs and benefits, and, in some cases, making a profit.

Question 19

How do public sector organizations differ in ownership and control?

Answer 19

Public sector organizations are controlled by government departments, public corporations, or local authorities, and their key policies are determined by the government

Question 20

Explain how a mixed economy addresses the basic economic questions of what to produce? how to produce? and for whom to produce?

Answer 20

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.