Read the information in the box and answer the question.

Question

Country X is a democratic country in West Africa. The economy of the country is mostly dependent on timber and oil exports. One state-owned company controls all production and sales aspects of the country's natural resource industries. The government restricts who may start a business in the country, and heavily taxes the businesses that do exist. Despite the restrictions, small restaurants, shops, and other businesses that do not compete with state-owned businesses thrive.

Which best describes the economy of Country X?
A.
pure market economy

B.
traditional economy

C.
mixed economy

D.
pure command economy

Answer 1

The best description of the economy of Country X is C. mixed economy.

In a mixed economy, there is a combination of both state control and individual entrepreneurship. In this case, the state-owned company controls the production and sales of natural resources (indicative of command economy characteristics), while there are small businesses thriving in other sectors (suggestive of market economy traits). The presence of government restrictions and heavy taxes also indicates a mixed system where both the government and private entities play significant roles.