Distinguish the public and private sectors, then explain how both government directives and the price mechanism influence what is produced and who receives it.
Nigeria has a mixed economic system. In January 2023, Nigeria had a high unemployment rate of 33% which created a number of costs. Its high inflation rate of 22% had several effects on the country's firms. In 2022 and the start of 2023, Nigerians increased their demand for foreign currency.
Explain how the key resource allocation decisions are made in a mixed economic system.
Explain how the key resource allocation decisions are made in a mixed economic system.
Logical explanation which might include:
Private sector / individuals / households / firms / consumers (1) will use price mechanism (1) demand and supply / demand / market forces (1) influenced by the profit motive (1) use most cost-effective methods of production (1).
Public sector / government / state (1) will use its spending (1) taxation (1) regulation / maximum prices / minimum prices / directives (1) influenced by social costs / social benefits / economic welfare (1).
4
Maximum of three marks if only one sector is covered.
For the last mark: accept, but do not expect reference to 'may carry out a cost-benefit analysis',