Advantages of mixed economies: Essential services Governments provide essential and desirable goods that would otherwise not be provided, such as policing, roads, parks and schools. Social welfare Governments can provide social welfare to those who are unemployed or those on low incomes. Public interest regulation Governments can introduce laws to prevent the production of dangerous or harmful goods or they can impose taxes on other goods, such as cigarettes, to discourage consumption. Governments can also introduce laws to protect workers, consumers and the environment from being exploited by private enterprises. Job creation
¶ ¶ ¶
¶
The more services it provides, the more employment the government can provide in public sector organisations.
Disadvantages of mixed economies: More government spending means higher taxes. Public sector spending is funded by taxes paid by private individuals and organisations. The more that the public sector spends, the higher taxes must be in order to pay for this spending. Government intervention can increase the cost of production. For example, complying with regulations that protect consumers, employees, and the environment is good for society but costs money and can reduce the profitability of businesses. Government economic decision-making can be influenced by the desire to win votes. For example, it is common for politicians to promise to spend more money on services ahead of elections, even if this is unaffordable or may carry significant opportunity costs.
¶ ¶ ¶ Pair work
1. Identify two advantages of a free market economy. 2. Identify two advantages of a centrally planned economy. 3. Ireland has a mixed economy. Identify two reasons why having a mixed economy is a good way to allocate economic resources.
