every society be it socialist capitalist and mixed economy is faced with four economic problems that are fundamental Explain
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every society be it socialist capitalist and mixed economy is faced with four economic problems that are fundamental Explain
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Answer:
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Explanation:
1. WHAT TO PRODUCE: This relates to deciding which goods and services to produce given limited resources. In a capitalist society, this decision is primarily driven by consumer demand and profitability. In a socialist system, it might be more about fulfilling societal needs. In a mixed economy, it's a balance between government intervention and market forces.
2. HOW TO PRODUCE: This involves determining the methods and resources used in production. Capitalist economies tend to rely on private ownership and market competition to determine efficient methods, while socialist economies might emphasize collective ownership and centralized planning. Mixed economies try to find a blend of both.
3. FOR WHOM TO PRODUCE: This problem involves distributing goods and services among the population. Capitalist economies distribute based on purchasing power – those with more money can buy more. Socialist systems may focus on equitable distribution, ensuring everyone's basic needs are met. Mixed economies attempt a balance between efficiency and equality.
4. HOW TO DEAL WITH SCARCITY: Resources are limited, so every economy faces the challenge of scarcity. This involves making choices on allocating resources efficiently to meet the needs and wants of society. Economies need to prioritize and make trade-offs between various goods and services.
These problems persist across economic systems, but the approaches to solving them vary based on the underlying principles of each system.