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Anna Markmann 26.10.03 The mixed market economy and the allocation of resources The essential economic problem is limited resources, such as land, labour, capital and enterprise, in relation to unlimited wants. Because of this, consumers, firms and governments need to make decisions. Therefore they have to concern themselves with effective methods of organizing the production, distribution, exchange, sharing goods and services. This allocation of limited resources is organised at markets through several different economic systems. In the mixed market economy it is partly a decision of the private sector and partly a decision of the government1. It contains the features of the market economy and the command economy. Resources are allocated by markets which set prices by a mechanism, called "the invisible hand" by the first economist Adam Smith (1723 - 1790), and government actions. In the market economy everything is based upon the idea of self interest in private property and strong motivation...

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