BASIC ECONOMIC PROBLEMS OF EVERY SOCIETY
BASIC ECONOMIC PROBLEMS OF EVERY SOCIETY.
Every society battles with the following Economic problems. Economic problems of what to produce, how to produce it, for whom to produced, efficient utilization of resourses and future growth of the Economy,
WHAT TO PRODUCE
It explains what kinds of goods to produce, that is what types of goods to produce and be made available for consumer satisfaction.
HOW TO PRODUCE
How to produce explains the methods of production to apply in production, is it capital intensive, which involves the use of machine for Mass production and efficiency. Is it labour intensive where manual labour will be applied. Decision will be taken on this.
FOR WHOM TO PRODUCE
This explains the category of people the production is meant in terms of age and population structure. Are the products meant for the children, adults or the old people.
EFFICIENT UTILIZATION OF SCARCE RESOURCES
This explains how limited available resources will be managed without waste. No idle resources will be allowed. Despite scarce resources, how the resources to will be managed is a problem of every society.
FUTURE GROWTH OF AN ECONOMY
Every society has the problem continuous growth of the Economy. How to maintain stability of how to prevent inflation, sustainable growth, fill employment etc., are all that problems of every society.
This is the system of producing and distributing goods and services and allocating resources in a society. It includes the combination of various institution agencies, entitles, and consumers that comprises of a community. It is an organized way in which a state or an organized way in which a state or nation allocate its resources and apportion goods and services in the national community. Common Economic System are: Capital. Communism, Market Systems. Mixed economy and Socialism. All economic systems are run differently different belief on what best help the economy to be successful. This government regulates different laws and ownership of business.
TYPES OF ECONOMIC SYSTEM
This is an economic system in which the means of production and distribution are owned and controlled by private individuals. In capitalist economic system, goods and services and factors of production are privately owned by individuals.
FEATURES OF CAPITALISM
- There is high degree of private ownership and control of means of production with minimal participation of the state.
- There is a greater existence of competition and more individuals and firms.
- There is high level of profit maximization by private investors.
- There is free market enterprise
- There is freedom of choice,
- The production and consumption are regulated by price system
- ADVANTAGES OF CAPITALISM
- It encourages hard work.
- It encourages economic competition.
- It ensures self regulation and reliance. It leads to specialization
- It enhances technological development
- DISADVANTAGES OF CAPITALISM
- It leads to economic exploitation
- It leads to economic inequality
- It increases crime few individual are enriched
- Profit maximization at all cost
- It can be called planned of controlled economic Socialism is an economic system in means of production are owned and managed by the controls all the economic and also decision concerning production and distribution are taken by the planning authority.
FEATURES OF SOCIALISM
- There is joint decision
- There is equitable distribution of Income
- All means production and distribution of income
- The motive of Socialist Economic System is not to make profit
- There is absence of economic rivalry
ADVANTAGES OF SOCIALISM
- There is equitable distribution of resources.
- It improves standard of living.
- There is absence of exploitation,
- It creates better human resources.
- There is central planned economics.
DISADVANTAGES OF SOCIALISM
- It creates room for laziness.
- It slows down economic development.
- There is absence of creativity and Innovation.
- There is lack of specialization.
- It reduces individual initiative.
It may be defined as the type of economic system in which both the private and public ownership of me production and distribution exist together in a country. This system overcomes the disadvantages of both the market and planned economic systems.
FEATURES OF MIXED ECONOMY
- There are co-existence of the public and private sector.
- There are joint decisions.
- There is reduction of economic inequality
- There is room for freedom of choice and enhance checks and balance
- There is fair competition.
ADVANTAGES OF MIXED ECONOMY
- There is less inequality of income.
- There is freedom of choice.
- It combines the good qualities of capitalism and socialism.
- It ensures economics development.
- It ensures job security.
DISDAVANTAGES OF MIXED ECONOMY
- There is inequality of wealth.
- There is a high level of competition and mismanagement of resources.
- There is lack of efficiency.
- There is more emphasis on profit maximization at the expense of welfare for the citizens.
- There is exploitation of labour