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CA Foundation · Business Economics · Nature and Scope of Business Economics

A mixed economy like India's is best described as one in which:

A mixed economy has both private and public sectors working together. Markets and prices guide much allocation, while the government regulates, provides public goods and intervenes to correct market failures. This differs from pure capitalism, pure socialism or a traditional economy.

  1. AOnly the private sector owns all means of production
  2. BOnly the government decides prices and output of every good
  3. CPrivate and public sectors coexist, with markets and government both influencing resource allocationCorrect
  4. DProduction is organised only on the basis of custom and tradition

Explanation

A mixed economy combines features of capitalism and socialism. Private enterprise operates alongside public sector units, and the government regulates or intervenes where markets fail. The option of only private ownership describes pure capitalism, and full state control describes socialism.

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