ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Mixed economic systems are not laissez-faire systems, because the government is involved in planning the use of some resources and can exert control over businesses in the private sector. Governments may seek to redistribute wealth by taxing the private sector and by using funds from taxes to promote social objectives.

Detailed explanation-2: -Whenever government interferes in market prices, catallaxy is distorted, causing misallocations of resources and deadweight losses. Despite their best intentions, mixed economies are a burden on the price mechanism.

Detailed explanation-3: -Examples include the economies of China, Norway, Singapore, and Vietnam-all of which feature large state-owned enterprise sectors operating alongside large private sectors.

Detailed explanation-4: -After independence, India had the option of being a capitalist or a socialist economy. The leaders of independent India wanted to give importance to both public and private sectors and hence decided to adopted the mixed economy principle.