In a mixed market economy, which of the following best describes the role of government?

• A. The government makes all production and pricing decisions.
• B. The government regulates and intervenes in certain markets while allowing private enterprise to operate freely in others.
• C. The government has no involvement in economic activities.
• D. The government owns all resources and distributes goods equally among citizens.

Answer: (B)

Verified step by step guidance

1. Understand the concept of a mixed market economy: it combines elements of both market economies (where private enterprise operates freely) and planned economies (where the government controls production and pricing).
2. Identify the role of government in such an economy: it does not control all production or pricing decisions, nor does it completely abstain from involvement.
3. Recognize that the government intervenes selectively, regulating certain markets to correct market failures, provide public goods, or protect consumers, while allowing private businesses to operate independently in other sectors.
4. Eliminate options that describe extremes: full government control (planned economy) or no government involvement (pure market economy) do not fit the mixed economy model.
5. Conclude that the best description is that the government regulates and intervenes in certain markets while allowing private enterprise to operate freely in others.