What three basic questions must every economic system answer?

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What three basic questions must every economic system answer?

Because of scarcity every society or economic system must answer these three (3) basic questions:

Q. How does a traditional economic system answer the economic question of what to produce?

Traditional economies rely on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it. In a centrally planned economy the central government makes all decisions about the production and consumption of goods and services.

Q. Who or what answers the basic economic questions in a traditional economy?

In a command economy, government leaders decide the answers to the basic economic questions. The government controls the land, labor, and capital (the three factors of production).

Q. Who answers the 3 basic economic questions in a market economy?

the central government
In a Centrally planned economy, also known as a command economy, the central government controls the factors of production and answers the three basic economic questions for all of society.

  • What to produce? ➢ What should be produced in a world with limited resources?
  • How to produce? ➢ What resources should be used?
  • Who consumes what is produced? ➢ Who acquires the product?

    Q. Which is economic system do individuals answer the three economic questions?

    Which economic system do individuals answer the three economic questions? In a Centrally planned economy, also known as a command economy, the central government controls the factors of production and answers the three basic economic questions for all of society.

    Q. How does a traditional economy answer the three basic?

    In a traditional economy handcrafts, farm animals and farming crops are produced. It is produced by the family unit or in small tribes/collectives all local to the area it is consumed in. It is produced for the family, tribe etc to use or to be traded locally for other handcrafts, animals or crops.

    Q. What are the four types of economic systems?

    Four Types of Economic Systems: <ul><li>1. Traditional Economy </li></ul><ul><li>2. Command Economy </li></ul><ul><li>3. Market Economy </li></ul><ul><li>4. Mixed Economy (Market + Command) </li></ul> 5.

    Q. How are the three economic questions answered in a mixed economy?

    Because ALL economic resources are scarce, every society must answer three questions: What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services? Which economic system do individuals answer the three economic questions?

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