Question

how does price mechanism solve the basic problem of what to produce and how much to produce in a capitalist economy



pls don't post the pic from the book , I am not able to understand it​

Answer 1

Answer:

In a free enterprise capitalist economy, the price mechanism, i.e., the free market forces of demand and supply, help to solve the fundamental economic problems of an economy. Price system indicates what goods and services should be produced. Secondly, how goods are to be produced can be learnt from the price system.

Answer 2

Answer:

In a free enterprise capitalist economy, the price mechanism, i.e., the free market forces of demand and supply, help to solve the fundamental economic problems of an economy. Price system indicates what goods and services should be produced. Secondly, how goods are to be produced can be learnt from the price system.