Planned Market and Mixed Economies

How are economic decisions determined in a pure market system?

• by a mixture of market forces and government regulation

• by central planners of production and consumption

• by government regulation of the price mechanism

• by the forces of demand and supply

Which person would wish to encourage the use of the market system?

• someone who believes that people should have equal living standards

• someone who believes that people should have freedom of action

• someone who believes that profit maximisation is wrong

• someone who believes that the government should correct peoples’ bad behaviour

Why might a free market economy be more advantageous than a mixed economy?

• Equality of income is encouraged.

• In a mixed economy, governments use taxes which are inefficient.

• Production is determined solely by consumer wishes.

• Social costs are taken into consideration.

What is likely to play a more important role in a mixed economy than in a free market economy?

• consumer wishes

• government intervention

• international trade

• the profit motive

What is found in a mixed economy but not in a free market economy?

• equilibrium prices

• income tax

• small firms

• the profit motive

In a mixed economy, output is produced by

• private enterprise and individuals.

• the market alone.

• the state alone.

• the state and private enterprise.

What is found in a mixed economy but not a free market economy?

• banks

• division of labour

• price controls

• profit motive

What is true of a mixed economy but is not true of a free market economy?

• There is a mixture of agricultural, manufacturing and service industries.

• There is a mixture of central authorities, firms and consumers.

• There is a mixture of external benefits and private costs.

• There is a mixture of large and small companies.

In a pure market economy, which secondary factor determines the distribution of goods and

services?

• fairness to the consumer

• needs of the consumer

• price of the product

• quality of the product

The government of a developed country subsidises local private businesses, and encourages large foreign companies to locate in the country.

Which type of economic system is this?

• free market

• mixed

• planned

• subsistence