ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An economic system is any system of allocating scarce resources. Economic systems answer three basic questions: what will be produced, how will it be produced, and how will the output society produces be distributed?

Detailed explanation-2: -We will briefly describe each of these three types. 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.

Detailed explanation-3: -This problems deals with the issue of deciding the category of people who will consume the goods. That is to produce goods for the poor or for the rich. Since the resources are scarce, the economy has to decide for whom it will produce goods.

Detailed explanation-4: -Command economy relies on government officials to answer the three basic economic questions. Officials called – central planners/ decide on what will be produced and made. Individuals have little or no say in economic choices. Command economies don’t exist.

Detailed explanation-5: -This helps to understand which good or services are required in the society (what to produce?) with which technique these are to be made (how to produce?) and who would consume these goods( for whom to produce?).