Country MA is an economy where the government controls the health, electricity, and water businesses and makes decisions about their production and distribution. Firms and consumers can exchange money for goods and services outside their government’s control. Firms can profit by buying resources and using them to produce goods and services for other businesses not operated by the government. Which type of economic system does Country MA have?

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BlackTom AI · Accepted Answer

The question describes Country MA as having government control over health, electricity, and water, while allowing exchanges in markets outside government control and permitting firms to profit by using resources to produce for non-government entities. This combination points to a hybrid system with both public sector involvement and private enterprise.
Option a: Market. A pure market system features minimal government intervention and private ownership with production and distribution largely driven by market forces. Since the government in Country MA directly controls essential services, this is not a pure market arrangement.
Option b: Planned Market hybrid. While this term suggests some planning mixed with market activity, the wording is unclear and not a standard classification. The description in the question aligns more closely with a recognized mixed economy rather than a labeled hybrid plan.
Option c: Planned. A strictly planned economy means the government centrally plans what is produced, how much, and at what price, with little to no private production for others. The existence of private firms producing for non-government entities indicates the system is not entirely planned.
Option d: Mixed. A mixed economy features both government involvement in providing and regulating essential services and a private market sector where firms operate and trade freely. This matches the scenario described, where the government controls some sectors but firms can operate and profit in other markets.

MUF0061 Economics Unit 1 - Semester 2, 2025

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