The central problem are divided into three economy are:-
1)market economy
2)centrally planned economy
3)mixed economy
1)market economy
2)centrally planned economy
3)mixed economy
Market economy
Market economy is a free economy. It mean that producer are free to decide what to produce, how to produce, and For whom to produce .on what basis of supply and demand force in the market.
What to produce
The producer will produce those good which are more in demand and less in supply. Such good offer high price and high profit to the producer
How to produce
The producer will those inputs which keep their cost of production as low as possible .so that their profit are maximised
For whom to produce
In a free economy, the producer will produce good for those people Who can afford to pay high price poorer section of the society are often ingored. It causes the problem of economic Divide ,as noted above.
Centrally planned economy
In a centrally planned economy, decisions relating to how, what, and for whom to produce are taken by some central authority appointed by the government of the country.
All decisions are taken with views to maximiseing Soical welfare . All decisions taken by central government of the country And the techique of production will be adopted which is socially most useful.
Mixed economy
Mixed economy share the merit of market economices as well as centrally planned economics .decisions regarding what, How,and for whom to produce are taken on the basis of Soical welfare. In certain areas of production, producer are free to decide their decision with views to maximiseing profit. In certain areas decisions taken under on the basis of Soical welfare..
