Mixed economic system

section 2

what happens in a mixed economy

resources are allocated based on both price mechanism and government decisions

what factors influence firms on the prices of their products

subsides and taxes

what impacts the effect of a subsidy for a business

the size of it and its PED

what other policies can influence private sector firms

• industrial

• competition

• environmental

How are maximum prices set

below the equilibrium price

How are minimum prices set

above the equilibrium price

how can regulations be ineffective

• they can be expensive to implement as punishing people takes a lot of money

• there effectiveness depends on how well people follow them

what can governments do to help economies

• correct market failure

• protect vulnerable groups

• ensure even distribution of income and wealth

what is an advantage and disadvantage of having a private sector investment project

• it ensures efficiency

• but it will only consider private costs and benefits