School of Economics

Solution to the central problem of an Economy in different economies. 1-In centrally planned economy: This is the economy in which social welfare is priority of economic agents so all economic decisions are taken by government or its authority .     a-What to produce- The government produce that good which is highly required by the society thus   social welfare is maximised , profit is ignored.      b-How to produce- Government uses labour intensive technique if there is unemployment in the  economy , if economy is in full employment level then government uses capital intensive technique  to   ensure to availability of low price goods in the economy.     c-For whom to produce- No doubt government produce for poor section of the society to maximise  social  welfare but growth is ignored. 2-In Market economy:  This is the economy in which profit maximisation is the priority of economic agents so all eco...

Economy: A geographical area known as an Economy where some people earn their living by performing different economic activities. Like A teacher teaches, Doctor treats patients,to satisfy own needs.         When people are less dependent to each other for their needs, is known as Simple Economy . But when the degree of dependence is high then it is called Complex Economy. At present we are living in complex economy, because our needs are very vast. Types of Economy 1-Centrally Planned Economy 2-Free or market Economy 3-Mixed Economy 1-Centrally planned Economy- These are those economy where maximum economic decisions are taken by some central authority or central government to keeping view in mind to maximize social welfare.Consumers are not sovereign in this economy. Public sector dominates the economy. Like Russia ,China(Before) Etc. (Economic decisions are mainly What to produce ,how to produce and for whom to produce) 2-Market or Free Economy:  These ar...