Question

In socialist economies, the answer to fundamental questions- what, how, and for whom to produce, are obtained by __________.

• A. market forces of demand and supply
• B. government regulations
• C. cost benefit analysis
• D. all of the above

Answer 1

The correct option is B government regulations

A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use in a socialist economy, the government plays a comprehensive role in almost all economic activities, such as production, distribution, and consumption, of a nation. In a socialist economy, not only the ownership of private property is allowed to a limited amount, but the concept of free market mechanism is also eliminated.The private ownership of resources, in a socialist economy, is changed by state ownership. In addition, in a socialist economy, the government plans and regulates all the economic activities centrally at a state level. Moreover, the decisions related to production, allocation of resources, employment, pricing, and consumption, are completely dependent on the government or its central planning authority. In a socialist economy, individual’s decisions are totally dependent on the limit decided by the government.