A free market economy is an economy in which the allocation for resources is determined only by their supply and the demand for them. This is mainly a theoretical concept as every country, even capitalist ones, places some restrictions on the ownership and exchange of commodities.
The following are the main characteristics of a mixed economy:
- Co-existence of the Public and private Sectors: The chief characteristic of a mixed economy is that in this economy both public as well as the private sector work mutually. They co-exist.
- Role of Price structure and Government Directives: Another characters-tic of mixed economy is that it is operated both by the price system and government directives.
- Government Regulation and Control of Private Sector: In a mixed economy, the administration implements required methods to control and control the private sector, so that it may work in the interest of the state rather than completely for profit making motives.
- Consumers Sovereignty Protected: In a mixed economy, the sovereign-Ty of the consumers is Like socialism, the mixed economy does not put an end to consumer’s sovereignty.
- Government Protection of Lab: In a mixed economy, government protects the weaker sections of society especially labor. That is, it saves labor from abuse by the capitalists.
- Reduction of Economic Inequalities: Extreme inequalities of income reduce social welfare. Income inequality creates inequalities of opportunities for education and training in favor of high-income groups.
- Control of Monopoly: In a mixed economy, the government tries to control and regulate The monopolist uses his monopoly power to exploit the consumers.