What defines a mixed economy?

A mixed economy is characterized by the coexistence of both private and state enterprises while also involving government regulations to manage economic activity. This structure allows for the benefits of both capitalism and socialism; the private sector can drive innovation and efficiency, while the government can address market failures, provide public goods, and ensure equitable distribution of resources.

In a mixed economy, the government regulates the activities of private enterprises to protect public interests, such as environmental regulations or labor laws, thus ensuring that the private market's decisions don't lead to negative outcomes for society as a whole. The balance achieved in a mixed economy helps mitigate the extremes of both a completely free market and a completely state-controlled economy, thus harnessing the strengths of each system.

This understanding of a mixed economy differentiates it from options that suggest an exclusively private or government-run system, which do not reflect the hybrid nature that defines mixed economies.