Thursday, 1 August 2013

Why Most of the country have mixed economic system

Why Most of the country have mixed economic system

1.    @  Market economies experience high unemployment sometimes because it may not be profitable to employ people. In a mixed economy if there is un­employment the Government may be able to create jobs for those people out of work by employing them in their own offices and factories, or by helping private firms to provide jobs.

2.   @ Public goods, such as defence, law and order, and street-lighting, will not be provided by private firms in a market economy as it would be impossible to get people to pay for their use. In a mixed economy a Government
can provide these public goods and raise the money necessary to pay for them by taxing people's income and spending. In addition, the Government may provide merit goods, such as education and health care, which it feels
people should have.

3.   @  Because some people may want to buy dangerous goods like drugs, firms in a market economy may find it profitable to provide them. In a mixed economy a Government may be able to stop people consuming harmful goods by making them illegal, for example, hard drugs, or by placing high taxes on them, for example, alcohol.

4.  @ Private firms only take into account their own costs and benefits when producing goods and services. For example, a private firm pouring waste into a river will not consider the cost to the environment. A Government may use laws, or high taxes and fines on firms, to try and prevent them polluting the environment.

5.   @ One of the main problems of a market economy is that poorer people with little money are unable to buy many of the goods and services that are available. Planning gives the Government the power to give goods and ser­vices, or more money, to the people that it thinks needs them. For example, in the United Kingdom, the Government provides unemployment benefits and free health care for those who cannot afford to pay.


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