Answer to Question #82972 in Microeconomics for shenali

Question

discuss whether prices are less important in allocating scarce resources in a mixed economy compared with a market economy

Answer 1

Market economy is based on a free market mechanism and independent decisions of economic agents. These agents require information how to allocate resources. Such information is provided by prices in a market economy. That is why prices are vitally important. In opposite, mixed economy are partially based on administrative decisions. Resources can be allocated according to plans. That is why prices are not such important