Role of Price Mechanism in Socialist Economy In a socialist economy, the decisions of what, how and for whom to produce is not dependent on market forces or price mechanism, these decisions are taken by the Central Planning Authority.
What does the problem for whom to produce refer to?
For whom to produce is one of the central problems of any economy and refers to the problem of how to distribute the produced goods and services among the individuals within the economy.
For whom to produce is a central problem of an economy explain?
The problem for whom to produce refers to selection of the category of people who will ultimately consume the goods. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises….Explain the central problem ‘for whom to produce. ‘
| Good X (units) | Good Y (units) |
|---|---|
| 2 | 7 |
| 3 | 4 |
| 4 | 0 |
Why must Societies decide for whom to produce?
What to produce? Societies have to decide the best combination of goods and services to meet their varied wants and needs. Societies must decide what quantities of different resources should be allocated to these goods and services.
What produces to produce and for whom to produce are the three fundamental economic questions?
In order to meet the needs of its people, every society must answer three basic economic questions: What should we produce? How should we produce it? For whom should we produce it?
What to produce explain?
1. What to Produce: This problem involves selection of goods and services to be produced and the quantity to be produced of each selected commodity. Every economy has limited resources and thus, cannot produce all the goods.
What are the problem of what to produce?
The central problem of “what to produce?” which is faced by the economy where the economy decides the goods that needs to be produce in the economy wether consumer or capital goods to satisfy human wants keeping in mind the available resources and state of technology in the economy.
