What to produce?
-
Deciding which goods and services to create based on consumer preferences, available resources, and societal needs. It involves evaluating what will best satisfy the wants and needs of society.
How to Produce?
-
Determining the methods and techniques for producing goods and services, considering factors like technology, production costs, and efficiency.
-
It involves choosing the optimal combination of resources
For Whom to Produce?
-
Deciding how the produced goods and services are distributed among people.
-
This depends on income distribution, market demand, and government policies to ensure fair access
Economic Systems
-
Different ways societies organize economic activity and allocate resources, including capitalism, socialism, and mixed economies.
-
Each system answers the basic allocation questions differently.
Market Economy
-
An economic system where decisions on production and consumption are guided by price signals from supply and demand.
-
It relies on market mechanisms for resource allocation.
Command Economy
-
An economic system where decisions are made by the government or central authority.
-
The government controls resource allocation and production decisions.