Question

Choose the correct option regarding the mixed economy taking the following statements into consideration.

Assertion (A): The government levies heavy taxes on unwanted things and low or no taxes on essential goods.

Reason (R): The government prioritises the production of necessities.

• A. Both A and R are true, and R is the correct explanation of A.
• B. Both A and R are true, but R is not the correct explanation of A.
• C. A is true, but R is false.
• D. A is false, but R is true.

Answer 1

The correct option is A Both A and R are true, and R is the correct explanation of A.

In a mixed economic system, the public sector and the private sector coexist and complement each other. Private ownership exists in trade, small consumer goods industry, and agriculture, whereas key areas like heavy industries, defence, railways, electricity, roads, and irrigation are owned by the state. The government levies heavy taxes on unwanted things and low or no taxes on essential goods. The government also provides concessions like subsidies and tax relaxation for industries in backward areas.