Paper 3 · Opportunity Cost and Scarcity
A mixed economy is one in which resources are allocated by
Athe largest firms in each industry, acting together by agreement
Bthe state alone, through a single central plan covering every industry
Cthe price mechanism alone, with no role at all for government
Dboth the private sector and the state, each correcting the other's weaknesses
Explanation: Private firms respond to profit and supply the goods consumers demand, while the state supplies public goods, subsidises merit goods and restrains the social costs the private sector ignores. Each sector does what the other does badly, which is the case for the mixed system.
Derived from ZIMSEC Economics 6073/3 Paper 3, November 2019, Q1