THE ROLE OF
MARKETS IN
ALLOCATING
RESOURCES
Presented by : Hania , Aliha , Mahvash
, Soha , Amna , Zarlish , Wajeeha ,
Manha , Noor , Manal , Mariam and
Raniya
3 TYPES
Planned Economy
OF ECONOMIC
SYSTEM
Free Market
Mixed Economy
A mixed economic system is a system that combines aspects of
planned and free market economy. In a mixed economy the three
basic economic questions are decided by the producers , consumers
and government. A mixed economy ensures that the consumers can
enjoy the benefits of private sector businesses while the government
also ensures the benefit to society and welfare of the people.
Mixed economic system also ensures that the private sectors are
staying within the law and keeps a check on retailers so that they
don’t take advantage of the consumers. A mixed economy seeks to
gain both a market and a planned economies advantages, having
some products produced by private sector means that there will be
choice and will also increase efficiency and create incentives.
MIXED ECONOMIC
SYSTEM
CHARACTERISTICS OF MIXED
ECONOMY
Co-existence of the
Private and Public
Sectors.
It allows free market
and the market
forces of demand
and supply to
determine the prices.
Everyone is free to
live, work, produce,
buy and sell
whatever as long as
its legal.
It protects private
property.
It enables the
government to
protect both the
people and the
market.
ADVANTAGES OF
A
MIXED ECONOMIC
SYSTEM
Prices are determined by market forces of
demand and supply however the state can
intervene sometimes to set price controls
Private sectors provide more variety of choice for
consumers
Private sectors often reduce costs to maintain
competitive thus creating more efficiency
Government granting subsidies will motivate the
producer to supply more
ADVANTAGES OF A MIXED
ECONOMIC SYSTEM
Government also discourages use of harmful products by imposing taxes on these. For example
tobacco can be highly taxed to discourage consumption
Things that benefit the society instead of making profit will be maintained by government like
Defense
Government is likely to allocate resources more efficiently.
The government will take into account all the costs and benefits that will arise from their
decisions for e.g even though projects like airports and railways take a long time before they
start making profit which means that the private sectors will not see any benefit in it thus the
state has to intervene and maintain these if the benefit to society is greater than the cost.
Government can also provide subsidies to producers to encourage them to produce more and
keep up with consumer demand.
The government also plans ahead of time and hence devote more resources to capital goods to
benefit the country later on in the long run.
Government also takes long term view like maybe building more flyovers for the future due to
increased housing
DISADVAN
TAGES OF
MIXED
ECONOMIC
SYSTEM
Indirect taxes imposed by government
can raise the price of certain products
Price controls set by the state will
demotivate the producers
Higher taxes to pay for welfare of
society such as defense , police
Some inefficiency occurs due to
government intervention
BENEFITS
OF
LIVING
IN A
MIXED
ECONOMY
Improvement of social welfare and security by the
government will be assured
Healthy competition between private firms will
create efficiency and relatively low prices as
producers will cut down costs.
Consumers have choice and freedom to choose
whatever they like
Income distribution is more likely to be even thus
will lessen the gap between rich and poor
The government will also take care of the needy,
vulnerable groups
EXAMPLES OF MIXED
ECONOMIES
Mixed Economies are those countries where the government takes a significant role
in directing the course of the market economy. Many countries in the Western
Europe are considered mixed economies because the government offers generous
welfare programs and tight regulations on business activity. Here are some
examples of mixed economies around the world.
 The United States, for example has many programs to benefit the poor, as well
as several government-owned enterprises.
 Both China and Vietnam have successfully privatized many of their state-owned
enterprises while retaining a role for the government in the economic affairs.
 India is also a mixed economy as it allows market forces to decide the price and
in some areas government intervenes like for necessary goods and decides the
prices to protect the interest of poor people.
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By: Hania , Aliha , Mahvash ,
Soha , Amna , Zarlish ,
Wajeeha , Manha , Noor ,
Manal, Mariam and Raniya