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Q 18

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Economics Today
Found in: Page 16

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Short Answer

Centralized command and control prevail throughout a certain nation's economy. What three key economic questions have been addressed in this nation, and what has been the common element of the nation's answers to those questions?

The three key questions are:

  1. What to produce?
  2. For whom to produce?
  3. How to produce?

The common element of the nation's answers to those questions are:

  1. Market System
  2. Central Planning
See the step by step solution

Step by Step Solution

Step 1. Given Information.

It is a centralized control and command economy in the nation.

Step 2. Three questions.

The three questions are:

  1. What to Produce? Select the category and good that has to be produced.
  2. How to Produce? The technology to be used for production whether capital-intensive or labor-intensive.
  3. For whom to produce? The consumer base for whom the goods are to be produced.

Step 3. The nation's answers

The nation's answers to those questions are:

  1. Centralized Command and Control - The economy should practice central planning by managing the rules and guidelines for production.
  2. Market System - Deciding the price system for deciding the demand and supply in the ecoonomy.

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