Question

How are central problems solved in different economies?

Answer 1

• Capitalist economies has private ownership where utilization of resources takes place for private gains, therefore here price mechanism takes place very smoothly without any government intervention to resolve the centrally based economic problems.
  
• Socialist economies has public ownership where utilization of resources takes place for social welfare, here the centrally based planning authority solves all the central economic problems keeping in mind the national priorities.
  
• In a mixed economy both private as well as public enterprises utilize the resources for the production of goods and services for personal as well as social gains. Therefore, the private sector generates price mechanism in the economy to solve to the centrally based economic problems whereas the public sector depends upon an efficient economic plan to be executed to eradicate these problems.