Syllabus: Pearson - GCSE Economics
Module: 1.1 The Market System
Lesson: Pearson - 1.1.5 The Mixed Economy

Introduction

This lesson supports the Pearson Edexcel International GCSE Economics syllabus, specifically topic 1.1.5: The mixed economy. It sits within the broader unit on the market system and follows logically from the study of market structures, supply and demand, and the causes of market failure.

Students explore how economies balance the role of the market with government intervention. For teachers, this topic is a practical bridge between theoretical economics and policy decisions seen in daily news. It also serves as a foundation for more advanced study in A Level and beyond.

Key Concepts

Students should be able to:

• Define a mixed economy: where both the private sector and the government play a role in resource allocation.

• Understand the rationale for government intervention: to correct market failures, redistribute income, and provide public goods.

• Compare economic systems: including the pros and cons of free-market and command economies.

• Analyse the advantages and disadvantages of a mixed economy:

  • Advantages: balance of efficiency and equity, provision of essential services, regulation of monopolies.

  • Disadvantages: potential inefficiency from state-run enterprises, risk of government failure, political influence over markets.

• Identify real-world examples of mixed economies and state involvement in different sectors.

These concepts help learners apply economic thinking to both local and global contexts, making abstract ideas tangible.

Real-World Relevance

The UK itself is a clear example of a mixed economy. Consider:

• The NHS, publicly funded and free at the point of use, coexists with private healthcare providers.

• Public transport services, like buses and trains, often receive government subsidies while operating in a market environment.

• During the COVID-19 pandemic, the UK government provided furlough schemes and loans to businesses, a clear case of intervention to stabilise the economy.

Looking internationally:

• Sweden and Norway balance high levels of public spending with competitive private sectors.

• In contrast, Venezuela’s heavily state-controlled economy shows the risks when government intervention becomes dominant.

These cases help students understand that the right balance between market and state isn’t fixed—it shifts depending on political, social and economic pressures.

How It’s Assessed

According to the Pearson specification:

• This topic could appear in any of the four compulsory 20-mark questions on Paper 1.

• Students may encounter:

  • Multiple-choice questions on definitions or comparisons of economic systems.

  • Data-response questions that include real-world examples of government intervention.

  • Short-answer questions asking for advantages/disadvantages or examples.

  • Open-ended questions requiring explanation or evaluation (e.g. “Evaluate the impact of government intervention in a mixed economy”).

Command words to focus on:

• Explain: justify why a mixed economy exists or how it works.

• Analyse: consider the consequences of government intervention.

• Evaluate: weigh up pros and cons, potentially using real data or policy examples.

Enterprise Skills Integration

This topic offers a natural route to exploring enterprise thinking. Students can develop:

• Decision-making: weighing private versus public provision of services.

• Critical thinking: evaluating government action in different sectors.

• Problem-solving: suggesting when and how a government should intervene to correct a market failure.

A classroom activity could involve a debate: “Should the government fully fund university tuition?” This encourages learners to consider stakeholders, opportunity costs, and policy trade-offs.

Careers Links

This topic links directly to:

• Public sector careers: civil service, policy analyst, economist in government departments.

• Private sector: consultancy, economics research, business strategy roles.

• Third sector roles: NGOs and charities often work at the intersection of market and government activity.

It also supports Gatsby Benchmarks 4, 5 and 6 by linking curriculum learning to real-world pathways and encouraging encounters with professionals via case studies or guest talks.

Teaching Notes

Planning guidance:

• This topic works well after students understand how free markets function and where they fail.

• Use case studies to keep the abstract grounded: e.g. housing policy, energy markets, or education.

Common pitfalls:

• Students often oversimplify with “government good, market bad” or vice versa.

• Encourage nuanced thinking by presenting both successes and failures of intervention.

• Watch for confusion between public goods and merit goods—clarify definitions early.

Extension ideas:

• Ask students to research and present an example of market failure and how their local council or government addressed it.

• Encourage them to compare how two countries handle similar services (e.g. healthcare in the UK vs USA).