CA Foundation Exam > CA Foundation Questions > A capitalist economy uses ___________________...
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A capitalist economy uses ____________________ as the principal means of allocating resources.
- a)demand
- b)supply
- c)efficiency
- d)prices
Correct answer is option 'D'. Can you explain this answer?
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A capitalist economy uses ____________________ as the principal means ...
As capitalist economy is related to private sector and its only motive is to earn higher profit.so,it uses price for allocating resources..
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A capitalist economy uses ____________________ as the principal means ...
Answer:
Introduction:
In a capitalist economy, the principal means of allocating resources is an important concept to understand. This refers to how resources are distributed and allocated within the economy to meet the demands and needs of consumers and businesses.
Principal means of allocating resources in a capitalist economy:
- Prices: Prices play a central role in allocating resources in a capitalist economy. They act as signals that convey information about supply and demand conditions in the market. When prices are high, it indicates that there is a scarcity of a particular resource or good, which encourages businesses to allocate more resources towards its production. On the other hand, when prices are low, it suggests that there is an abundance of a resource or good, leading businesses to allocate fewer resources towards its production.
- Demand: Demand also plays a crucial role in resource allocation. In a capitalist economy, the preferences and choices of consumers determine the demand for goods and services. When there is a high demand for a particular good, businesses allocate more resources towards its production to meet the demand. Conversely, when there is low demand for a good, businesses allocate fewer resources towards its production.
- Supply: The concept of supply is closely linked to resource allocation in a capitalist economy. Supply refers to the quantity of goods and services that businesses are willing and able to produce and sell at a given price. Businesses allocate resources based on the expected profitability of producing and supplying certain goods and services. If the supply is expected to be profitable, businesses allocate more resources towards its production.
- Efficiency: Efficiency is another factor that influences resource allocation in a capitalist economy. Businesses aim to allocate resources in the most efficient manner to maximize their profits. This involves utilizing resources in a way that minimizes waste and maximizes output. Efficiency is achieved through factors such as technological advancements, cost-effective production methods, and effective resource management.
Conclusion:
In a capitalist economy, the principal means of allocating resources are prices, demand, supply, and efficiency. These factors interact with each other to determine how resources are distributed and allocated to meet the needs and demands of consumers and businesses.
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A capitalist economy uses ____________________ as the principal means of allocating resources.a)demandb)supplyc)efficiencyd)pricesCorrect answer is option 'D'. Can you explain this answer?
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A capitalist economy uses ____________________ as the principal means of allocating resources.a)demandb)supplyc)efficiencyd)pricesCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A capitalist economy uses ____________________ as the principal means of allocating resources.a)demandb)supplyc)efficiencyd)pricesCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A capitalist economy uses ____________________ as the principal means of allocating resources.a)demandb)supplyc)efficiencyd)pricesCorrect answer is option 'D'. Can you explain this answer?.
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