The mixed economy Flashcards
What is resource allocation?
Resources are scarce and decision must be made as to were these resources are allocated.
What is a mixed economy?
Private and public sectors to aid resource allocation through the market mechanism.
Name a private business
McDonalds, KFC, Gucci.
Name a public business
Healthcare, transportation.
What is a private sector?
Organisations are owned by individuals and driven by profit.
What is a public sector?
Organisations are owned by the government.
What is market failure?
An inefficient distribution of goods and services in the free market.
What is an example of market failure?
People smoke although they know it might give them cancer.
What is the free rider problem?
When a rational consumer will let someone else pay for the provision of the good/service.
What does non-excludability mean?
Once its created everyone benefits
What does non-rivalry mean?
Consumption doesn’t diminish the benefit.
What is privatisation?
From a public business to private business
