An economy that uses both prices and sales as well as government directives in the allocation of scarce resources is known as a government failure. market mechanism. market system. mixed economy.

A mixed economy cleverly combines the free market's ability to allocate resources through prices and consumer choice with the oversight of government directives to address market failures and promote social welfare. This system aims to strike a balance between economic efficiency and equity, ensuring essential services and public goods are available while allowing for individual entrepreneurial efforts. In real-world terms, mixed economies are seen in countries like Sweden and Canada, where both private enterprise and government involvement thrive. These nations often regulate industries like healthcare and education, providing citizens with access to essential services while maintaining a robust private sector. This blend can lead to innovative solutions that cater to both public needs and market-driven demands!