Solution to the central problem of an Economy in different economies.
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...