Question

The fundamental economic problems are solved differently by different economic systems. Discuss how a capitalist economy solves these problems.

Answer 1

Answer:

Under such economies, all economic problems are solved with the help of free price mechanism and controlled price mechanism (economic planning). Free price mechanism operates within the private sector; hence, prices are allowed to change as per demand and supply of goods.

Explanation:

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Answer 2

Answer:

Uneven distribution of natural resources, lack of human specialization and technological advancement etc., hinders the production of goods and services in an economy. Every economy has to face the problems of what to produce, how to produce and for whom to produce. More or less, all the economies use two important methods to solve these basic problems.