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

Which feature best distinguishes a mixed economy such as India from a pure capitalist economy?

A mixed economy is distinguished by the coexistence of public and private sectors, where the government both regulates and directly produces some goods and services. Private property, price-based allocation and consumer choice exist in pure capitalism too, so they do not set it apart.

  1. AExistence of private property and profit motive
  2. BUse of prices to allocate some goods and services
  3. CCoexistence of public and private sectors, with government regulating and directly producing certain goods and servicesCorrect
  4. DPresence of consumer choice in buying goods

Explanation

Private property, prices and consumer choice are found in both a capitalist and a mixed economy, so they do not distinguish them. What marks a mixed economy is the coexistence of a significant public sector alongside the private sector, with the state both regulating and producing.

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