Merit and demerits of mixed economy

Competition in a capitalist economy is the driving force behind better products and low prices, as suppliers try to lure consumers offering the best of both world. Merits of Mixed Economy Efficient resource utilisation: It leads to increase in capital formation within the country.

Motive of Business Concerns The motive of the business concerns is profit but coupled with the objective of social welfare. The private sector produces and distributes goods and services.

Hence it is imperative that the state, should come forward to play a vital role. Again, this will help in the fast economic development, especially in the areas of industries and agriculture.

Under the mixed economy, the advantages of both capitalism and socialism are incorporated and at the same time their evils are avoided.

Mixed Economy: Features, Merits and Demerits

So the private sector can also be made to work efficiently by proper control and direction. All inclusive packages available. In this system, both sectors suffer due to lack of efficiency.

For this reason private sector does not put into use their resources for the common benefits. Features, Merits and Demerits Article shared by: It maintains a good balance between public and private sector. A mixed economy maintains a general balance between the public sector and the private sector.

This is primarily because of the government trying to mobilize resources to produce products and services that are generally beneficial for society, rather than doing it for the betterment of the economy. There is no exploitation either by the capitalists as under a free enterprise economy or by the state as under a socialist economy.

They do not face each other and private sector is treated like a third person. On the other hand, the public sector too does not operate under very rigid conditions enforced by the planned economy.

The principal aim of a mixed economy is to maximise social welfare.

What are the merits and demerits of specialization in an economy?

For this reason, government agencies, such as the Federal Trading Commission in the U. Profit will be the primary motive of private sector industries. The business fluctuations are also not present and hence there is no problem of unemployment or depression.

Mixed economy is expected to retain only the merits of the two systems. The experience of the working of mixed economies reveals that the public sector and the private sector do not see eye to eye with one another. The merits of accounting is that it helps in budgeting.

Hence economic fluctuations which are a characteristic feature of a capitalist economy are equally experienced in a mixed economy. More taxes would be required from the people, which can lead to negative consequences.

Advantages and Disadvantages of Mixed Economy

The entire economic system is subject to systematic planning of the Government. Governments make policies and decisions knowing that if they are not in the interest of the masses then there is bound to be opposition and the next time during election,the people through the power of the thumb voting will vote the Government out.

The operation of price mechanism provides an element of dynamism to the economy. All decisions regarding what, how and for whom to produce are taken by the State. Under a mixed economy, a sector is formed on cooperative principles.

This means that private entities will have to stay on the psychological apprehension that their business would be nationalized or taken over by the government. Economic stability and proper allocation of resources: Public and private sector operate in competitive spirit in the interest of the society.

Workers are given incentives and reward for any innovations. A mixed economy contains all the features of a welfare state.

What is Mixed Economy, Advantages & Disadvantages of Mixed Economy

The public sector also operates basic, heavy, strategic and defence production industries which require large investment and have long gestation period.Our tutors who provide Merits of Mixed Economy, Demerits of Mixed Economy help are highly qualified.

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8 Advantages and Disadvantages of the Mixed Economy

Please do send us the Merits of Mixed Economy, Demerits of Mixed Economy. Mixed Economy: salient features, Merits and Demerits In a mixed economy, both public and private institutions exercise economic control.

The public sector functions as a socialistic economy and the private sector as a free enterprise economy. ADVERTISEMENTS: Merits of Mixed Economy: There are several advantages of mixed economy which are as below: (i) Encouragement to Private Sector: The most important advantage of mixed economy is that it provides encouragement to private sector and it gets proper opportunity to grow.

Disadvantages of Mixed Economy Since welfare of society is important in a mixed economy it leads to lower than optimum use of the resources because government mobilize the resources towards the production of those goods and services which are beneficial for the society as a whole rather than producing those goods and services.

The major merit of a mixed economy is that the public is protectedbecause the government is in charge of public services, and pricesare low because.

Mixed economy. Some private businesses, driven by profit. Some controlled by government; Private: mobiles, cars, computers; Essential services: police, fire service.

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Merit and demerits of mixed economy
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