What is the meaning of a 'Mixed Economy'?
Last updated Jun 24, 2026
Correct Answer:
Option B —
Both the public and private sectors are involved
A Mixed Economy is an economic system that combines elements of both Market (Private) and Planned (Public/Government) economies. In this system, the government and private individuals/firms coexist and share the responsibility for investment, production, and distribution.Core Features of a Mixed Economy:
Coexistence: Both the public sector (government-owned enterprises) and the private sector (privately-owned businesses) operate simultaneously.
Resource Allocation: While the market forces of supply and demand determine the prices of most goods, the government intervenes to provide essential public services and regulate monopolies.
Social Welfare: The government often manages sectors like healthcare, education, and defense to ensure they are accessible to all, regardless of profit margins.
Economic Planning: The state may use "indicative planning" to guide the economy toward national goals, such as reducing poverty or improving infrastructure.
Why the other options are incorrect:
A: While traditional and modern industries can exist together (often called a "Dual Economy"), this does not define the fundamental economic structure of a Mixed Economy.
C: The involvement of foreign and domestic investors refers to an Open Economy or investment policy, not the core structural definition of how the economy is managed.
D: This describes a transition in Agricultural systems, not a national economic model.
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