Mixed Economy:

It is an economic system which combines features of both capitalism and socialism. In a mixed economy therefore, there exist private and public ownership of productive resources. In those areas where the private individuals and firms are dominat, allocation and distribution of resources is done by price - mechanism. But in those activities reserved for the government, central planning and administrative fiat decisions are used to solve fundamental questions on allocation and distribution of resources, goods and services.

The state intervention, however, is considered necessary to remedy the defects of the market economy earlier identified.

In the real - world, all economics are mixed, but the extent to which one maixed economy differs from another depends largely on how the government interprets its role in the economy.