ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -In a market economy, resources are owned by private individuals. The goods and services that are produced are not determined by the government. Rather, production is determined by businesses responding to the wants and desires of consumers.

Detailed explanation-3: -The primary group for whom goods and services are produced in a traditional economy is the tribe or family group. In a command economy, the central government decides what goods and services will be produced, what wages will be paid to workers, what jobs the workers do, as well as the prices of goods.

Detailed explanation-4: -All economies must answer basic questions like what goods and services to produce, how to produce these goods and services, and how to distribute the goods and services – using their scarce resources.