Introduction – Characteristics of the Mixed Economy
In this article lets see What is the Mixed Economy, Characteristics of the Mixed Economy, Mixed Economy in India, Its advantages & Disadvantages.
What is the Mixed Economy
A mixed economy combines the best features of capitalism and socialism. Thus mixed economy has some elements of both free enterprise or capitalist economy as well as a government controlled socialist economy. The public and private sectors co-exist in mixed economies.
Meaning of Mixed Economy
In economics mixed economy refers to a market system of resource allocation, commerce, and also trade in which free markets coexist with government intervention
Characteristics of the Mixed Economy
The main characteristics of a mixed economy are as follows:
Co-existence of public and private sectors
- The private sector consists of production units that are owned privately and also work on the basis of profit motive.
- The public sector consists of production units owned by the government and also works on the basis of social welfare.
- The areas of economic activities of each sector are generally demarcated. Government uses its various policies e.g.licensing policy, taxation policy, price policy, monetary policy and fiscal policy to controland regulate the private sector.
Individual Freedom
- Individuals take up economic activities to maximize their personal income. They are free to choose any occupation and also consume as per their choice. But producers are not given the freedom to exploit consumers and labourers.
- Government puts some restrictions keeping in mind the welfare of the people. For instance, government may put restrictions on the production and also consumption of harmful goods.
- But within rules, regulations and restrictions imposed by the government, for the welfare of the society the private sector enjoys complete freedom.
Economic Planning
- The government prepares long-term plans and decides the roles to be played by the private and also public sectors in the development of the economy.
- The public sector is under direct control of the government as such production targets and also plans are formulated for them directly.
- The private sector is provided encouragement, incentives, support and also subsidies to work as per national priorities.
Price Mechanism
- Prices play a significant role in the allocation of resources. For some sectors the policy of administered prices is adopted. Government also provides price subsidies to help the target group.
- The aim of the government is to maximize the welfare of the masses. For those who can not afford to purchase the goods at market prices, government makes the goods available either free of cost or at below market (subsidized) prices.
- Thus in a mixed economy people at large enjoy individual freedom and also government support to protect the interests of weaker sections of the society.
Mixed Economy Country Examples
Let’s see the mixed economy country examples
Mixed Economy in India
Indian economy is considered a mixed economy as it has well defined areas for functioning of public and private sectors and also economic planning. Even countries such as USA, UK, etc. which were known as capitalistic countries are also called mixed economies now because of active role of their government in economic development.
Advantage of Mixed Economy
Here are some advantage of mixed economy
- Both public and private sectors can survive
- Consumer supremacy is maintained
- Government control monopoly
- Weaker section gets benefits
- Economic imbalance is reduced
- Innovation and product methodology is rewarded
- Abundant resources can generate
Disadvantage of Mixed Economy
Here are some disadvantage of mixed economy
- Unclear government control
- Untrust on private sectors
- Difficulties faced in public sectors
- Taxes are applied
- Reduces competition
- Can tend towards government control
Mixed Economy FAQ
What are the main characteristics of a mixed economy?
A mixed economic system is a system that combines aspects of both capitalism and socialism. The Following are the characteristics of a mixed economy
- Co-existence of public and private sectors
- Individual Freedom
- Economic Planning
- Price Mechanism
What are four features of mixed economy?
Under a mixed economy individuals have the following features
- Freedom to produce goods and services
- Hold property,
- Choose their occupation and
- Choose or demand for products and services according to their needs.
What are the 3 mixed economies?
Market, Command, and Traditional economies
What is mixed economy in India?
Indian economy is considered a mixed economy as it has well defined areas for functioning of public and private sectors and also economic planning.
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