What is a Mixed Economy?

Yesterday in class, Sam was really struggling with his homework. He decided to ask his classmate Sara about America's economic system as he was really unsure about what type of system we have.

Sara explained, 'Sam, the United States is a country with a mixed economy.'

Sara continued on:

'Two other economic system examples are market economies and planned economies. In amarket economy, the consumer plays a larger role than the national and state government. The economy is run by the consumers' purchasing choices. In a planned economy (also called a command economy), the government controls all of the decisions for owning, making, issuing, and exchanging goods.'

He replied, 'Okay, that makes sense, but what about the mixed economy? Sara, can you tell me the features of that type, and maybe give some examples?'

'A mixed economy consists of both private companies and government/state-owned entities. Both have control of owning, making, selling, and exchanging goods in the country. We learned what planned and market economies are; let's just think of a mixed economy as containing features of both planned and market economies.'


'One main characteristic of a mixed economy is the ownership of goods by both private and government/state-owned entities. Monopolies have the potential to occur in this type of economy, but the government closely monitors this. For the economy to be mixed, the government can control some parts but not all. For example, the government may control health care and/or welfare in some mixed economy countries.'


'Let's look at some examples of mixed economies in more detail.'

Example 1: United States

'The U.S. consists of both private and government/state-owned entities. Sometimes, the government gets involved to help the economy. Two examples of government assistance in the U.S. are welfare and unemployment benefits. These provide financial assistance for people who are in need. There are many types of welfare programs including:

Housing aidAid for childrenHealthcareFood stamps (which are tickets and/or funds designated to buy food for people with low income)