Answer to Question #210051 in Economics for Ase

Question

There are three central questions that any economic system needs to answer in order to address the scarcity problem. Discuss these three questions,elaborating on the info needed and the distinctions that must be made in order to answer these questions. In addition, explain how each question is addressed in each of the four economic systems

Answer 1

The choice of the type of economic system depends on the legal system, forms of ownership, mechanisms for making economic decisions, moral whether, habits, customs, given in a given society.

Every society, faced with the problem of limited available resources-owls, with an unlimited growth of needs, makes their choice and according to their corresponding

on three main questions of economics:

• what to say?

• how to ask?

• for whom to pronounce?

Depending on the chosen solutions, the types of economic systems: traditional, market, centralized.

The traditional system is characterized by the fact that the relationship of sale and purchase is poorly developed, agriculture prevails. Three main issues of the economy are resolved according to established traditions. In the early stages of the development of society, there were primitive family groups. Later, slaveholding relations arose, then feudal relations. Currently, traditional The naya system has survived in remote, hard-to-reach areas: in the jungle, in the mountains, on the islands, etc. But some features of the traditional system persist in any modern society.

The centralized system, which is also called planned, command, administrative, is characterized by the fact that state ownership is the main form of ownership. Three main economic issues are addressed centrally and directively. The main incentive for the work of enterprises is the fulfillment of the plan.

The main incentive for enterprises in a market system is profit. The main form of ownership of the factors of production is private, the role of the government is limited. The signs of a market system are competition, freedom of entrepreneurship and choice, free pricing.

The main issues of the economy in a market system are solved on the basis of a free price system:

• the question "what to produce?" decided by firms taking into account customer demand;

• the question "how to produce?" is decided by firms taking into account the profitability motive, that is, firms choose the most efficient method of production;

• the question "for whom to produce?" is decided in accordance with the purchasing capacity.

One of the important advantages of a market system is the efficient use of resources.