There are three main types of economic systems: command, market, and mixed. In a command economy, what goods and services are produced, how they are produced, and for whom they are produced are all questions answered by government planning. The government makes economic decisions for the good of society.
Who answers the questions in a command economy?
In a Centrally planned economy, also known as a command economy, the central government controls the factors of production and answers the three basic economic questions for all of society.
What are the 3 basic economic questions and who answers them in market and command economies?
Because of scarcity every society or economic system must answer these three (3) basic questions:
- What to produce? ➢ What should be produced in a world with limited resources?
- How to produce? ➢ What resources should be used?
- Who consumes what is produced? ➢ Who acquires the product?
How are economic questions answered in a command economy quizlet?
This system relies on the government to determine what goods and services to produce and how to produce them. How does the command economy answer the three basic economic questions? The government answers all of the questions. Public ownership of all means of production.
How does the command economy system answer the three basic questions?
Back to economics, the command economy is comparable to a very sophisticated Decision Tree created from the many experts the government puts into running it. A good command economy is comparable to the C4.5 tree trying to approximate the optimal answers to the 3 basic questions in an economy.
Is there an optional answer to command economy?
Technically, there is always an optional answer for all three questions at any given point in time in any given economy. But the optional answer is always hidden, and all you can do is to approximate it with your own predictions for it. Thus, the question should be “how good a job” is command economy at approximating the optimal answer.
How are questions answered in a market economy?
Are answered in a market economy by no one person in particular. No one person can answer those questions for everyone. They can only answer those questions for themselves.
How are the three basic economic questions answered?
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? Furthermore, what societal values play a role in how the three basic economic questions are answered in the United States?
