Australia attempts to solve the economic problem by the implementation of its mixed economy. The Australian economic system resides between a planned and free market enterprise, leaning more towards a free market with some government intervention. With a definable economic state, it becomes possible to further outline the aspects of it and how it actually attempts to address the
The mixed economy derives from the pure market economy which an economy runs entirely by private firms and businesses. It can be defined as an economic system where the decisions concerning production and distribution are made by a combination of market forces and government decisions.
In solving the
The supply and demand principal has a large impact on what is produced. It is the interaction between consumers and businesses for example if a product is demanded by consumers, then businesses will produce more as to retain more profit. Thus, a cycle emerges, the encirclement of profitable and non-profitable products. The Australian Government can be an intervener in regards to what is produced. It can provide public goods such as schools, roads and a defence force. It may also limit production of illegal and harmful products.