Standard SSEF4a- Compare the different economic systems SSEF5a. Explain why the gov’t provides for the people. SSEF5b. Give Examples of gov’t regulation and deregulation and its effects.

Mixed Economy A mixed economy has elements of both market and command economies Individual buyers and sellers often have the right to decide how scarce resources are allocated The government plays a role when needed Market Command Mixed

Examples of Mixed/ Market Economies North American countries European Countries

Resolving Market Failures A market failure is a situation where markets fail to allocate resources efficiently. Command No market failures No markets Mixed The government regulates Market Buyers and sellers Survival of the fittest

Market failure A market failure can happen when of these four conditions are not met 1. Adequate Competition 2. Well informed buyers and sellers 3. Resources to move from one industry to another 4. Reasonable Prices

Correcting market failures in a mixed-market economy The government tries to keep the market competitive and provide public goods and services so market failures don’t occur. They can also regulate industries to prevent market failures.

Characteristics of Mixed Market The Government Protector Provider and Consumer Regulator Promoter of National Goals

Characteristics of Mixed Economy Gov’t Regulation & Deregulation Regulation-tighter restrictions and rules companies must follow Deregulation- relaxing rules and laws companies must follow

Maintaining Competition in a mixed-market economy The government uses regulation and deregulation to make sure industries: stay competitive products are safe for consumers working conditions are safe/fair

Examples of government intervention: Regulation Deregulation FDA-food and drug safety EPA- environmental safety FDIC- protection within the banking system 18th Amendment Phone Companies Banks Airlines 21st Amendment

The government provides Public Goods Public goods are consumed without paying for them so the government provides them through tax dollars if people want them. Individuals or private businesses wouldn’t provide Most goods and services are private

2 Characteristics of Public Goods: Shared Consumption When one person consumes a public good, it does not prevent others from consuming the good. Non-exclusion Once a public good is produced, it is difficult or impossible to exclude others from consuming the good, even if they didn’t pay for it. Public Good

Redistribution of Income Tax those with large income and help those in need Examples: Welfare Medicare Unemployment Social Security Healthcare?

Stabilize the Economy Reduce unemployment and inflation, and promote economic growth

Allocating Resources Command: government makes all the decisions Market: consumers decide by their purchases Mixed: government provides minimal guidance and regulations for production of goods/services

Incentives Command: None Market: High. Driving force (profit) of efficiency and productivity. Mixed: High. Profit is the major incentive of efficiency and productivity.

Profit Motive Command: does not exist. Government makes all decisions. Market: system is driven by profit. Survival of the fittest. Mixed: Profit is the driving force. Tends to be socially conscious.

Consumer Sovereignty Command: consumers have little say. Government makes all decisions. Market: focus is on consumer goods and what consumers will buy, high consumer satisfaction Mixed: high degree of seller/buyer autonomy determines supply and demand

Competition Goal: price stability Command: individual initiative is unrewarded, no competition Market: very stiff competition, survival of the fittest Mixed: government gets involved when businesses/individuals get too powerful/rich

Government Regulation Goal: competition and food/workplace safety Command: all decisions made by government. Red tape slows things down. Market: Very little government interference, if any. Mixed: directs industry into needed areas, little interference