Identity the type of economic system. Enumerate one advantage and one disadvantage per statement/condition and explanations. 1. The state regulates income inequalities. 2. The government intervenes to try to reduce market failure. 3. No one is responsible for trying to eliminate unemployment.
1. The state regulates income inequality in the mixed economic system.
Advantages:
The government intervene less than command economy but government intervene by using tax to redistribute the income and to decrease inequality. It creates social programs such as healthcare and social security.
Disadvantage:
The government intervention through tax leads to inefficient allocation resources. . The intervention leads to less than optimum use of resources as the government mobilize resources from productive sectors to social welfare activities.
2. The government intervened to try to reduce market failure in the mixed economic system.
Advantages:
The government will break up large companies when they try to abuse monopoly power. It also tries to reduce negative externalities which create failure in the market by taxation.
Disadvantage:
The intervention of government sometimes is not enough to reduce failure in the market. The public enterprise often runs into a large deficit due to high subsidies. The private firm faces difficulties because of interference.
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