Question

Carrie works at a canned food production factory. The government wanted to give a boost to the salt industry, so it lined up numerous subsidies and tax exemptions for the sector. This lead to a decrease in production costs. This also meant that consumers could access canned foods at a lower price, which lead to an increase in demand for the product. Which kind of economic system is Carrie’s company dealing with?
Carrie’s company is dealing with a/an _______ economy.

Answer 1

Carrie's company is dealing with a mixed economy.

Explanation:

Mixed economy is that type of economic system where the laws of demand and supply direct the production and the consumption of the goods and the services in the market along with the intervention of the government in the business. This means that with the increase in the price, the demand of the good falls and vice versa.

So in this company, with the tax exemption from the government, there is fall in the price of production, leading to increase in the demand because of the fall of price of the goods. So there is a mixed economy.