Our Economy: Strand 3


Type Mixed economy


Explanation A mixed


economy is a combination of centrally planned and free enterprise. It is a mixture of privately owned and state-owned enterprises. Citizens are free to establish their own businesses. The government provides some essential services.


Example Benefits and drawbacks Ireland


Benefits • Services:


The government provides services which may be loss-making and would not be provided by private entrepreneurs, e.g. local, unprofitable bus route.


• Choice:


Consumers have more choice within the economy and also have a choice between private or public services, e.g. healthcare.


Drawbacks • Taxes:


Higher taxes will be sought to cover the provision of public services such as street lighting and loss-making government-run companies.


• Competition:


Government intervention can lead to little or no competition in the area or may cause inefficiencies as profit is not the motive, e.g. Irish Rail.


Free enterprise


Citizens are free to make decisions about the production of goods and services. Companies and individuals are free to


operate without government intervention.


USA


Benefits • Competition:


Prices are low for consumers as firms compete for market shares.


• Entrepreneurship:


With high profits, citizens are encouraged to set up their own business. This has spin-off effects on the economy with fewer people claiming Jobseeker’s Allowance and more tax revenue for the government.


Drawbacks


• Uneven distribution of wealth: There is a large gap between the rich and the poor, leading to social issues, e.g. anti-social behaviour.


Research It!


Look up what life is like in the countries that are mentioned in this table.


• Lack of regulation:


Lack of government intervention and regulation could lead to damage to the environment and safety issues around goods and services.


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