HOW TO SOLVE CENTRAL PROBLEMS OF ECONOMY?
Solution to central Problems in a Capitalist Economy
What to produce?
Those goods will be produced for which the demand is high
How to Produce?
Those Production techniques will be employed which will minimise the cost of Production.
For whom to Produce?
Only for those who have the capacity to pay
Solutions to Central Problems in a Centrally Planned Economy
What to Produce?
Those goods will be Produced which will enhance the welfare of the society as a whole
How to Produce?
The Production technique which suits the economics conditions in the best manner will be used.
For whom to Produce?
For the society as a whole
Solution to Central Problems in a Mixed Economy
What to Produce?
This Problem is solved through Price mechanism and also through central planning.
How to Produce?
Private sector decides to employ those production techniques which reduces the cost of Production.
For whom to Produce?
The final Product Produced by the private sector is distributed through price mechanism while by Public Sector it is distributed through Public Distribution system.