Chapter 1 What Is Economics? 25
Mixed
Most economies are mixed. A mixed economy is a combination of
the market and the command systems. For example, a mixed economy
may function through a marketplace, although the government or central
authority regulates the prices and supply of goods and services. Government
may regulate certain industries such as utilities and airlines.
Case Study: Living in a Command Economy
Mariya’s and Sasha’s Apartment
Mariya and Sasha plan to marry after they fi nd a place to live. Now they
each live in a small apartment with family members. Mariya works in a factory
an hour away. Sasha works in the same factory and lives an hour away in
another direction.
Every Sunday Mariya and Sasha go to a place where people gather to
fi nd living space. Hundreds of people carry handmade signs advertising living
quarters to trade or living space wanted.
When housing agreements are made, the authorities must approve them.
The parties involved must show their registration cards to prove they had
permission to live in the country. In addition, the agreement cannot violate
living space restrictions for different categories of people.
After several months of searching, Mariya and Sasha make an
agreement with a man who plans to move from town to the country. He
wants the U.S. equivalent of $300 for his one-room apartment. This is most
of their savings, but Mariya and Sasha consider it a bargain. They do not see
the apartment right away, but they know it is in a fairly new building not far
from their workplace. More important, it will be theirs.
Case Review
1. How might a severe housing shortage affect you over the next 10 years?
2. Housing costs in command economies are controlled by the state and
are very low compared to those in the United States. To what extent
would you be willing to sacrifi ce privacy, quality, and availability of housing
to cut housing costs by 70 to 80 percent?
3. Why is housing likely to be more limited in a command economy than in a
market economy?