In a centrally planned economy, the central problems are solved bya)Planning authorityb)Market mechanismc)Demand for goodsd)Supply of goodsCorrect answer is option 'A'. Can you explain this answer?

Question

Answer

Yeah its planning authority or government of ones country that takes all the major decisions regarding economy

Answer

Through central planning because it is the Central Authority which directly solves the central problems of 'what, how and for whom to produce' by incorporating solution in the plan itself. the PPC, the opportunity cost increases.The second method which can be employed to solve the central problems is the adoption of economic planning.

Answer

Answer:
In a centrally planned economy, the central problems are solved by the Planning authority, which is typically the government or a centralized planning agency. This type of economic system is characterized by government control and ownership of resources and the means of production. The central planning authority plays a key role in making decisions related to the allocation of resources, production, and distribution of goods and services.

Planning Authority:
The planning authority in a centrally planned economy is responsible for developing and implementing comprehensive economic plans. These plans outline the production targets, resource allocation, and distribution of goods and services. The planning authority uses various methods and tools to gather information, analyze data, and make decisions based on the overall economic goals and objectives set by the government.

Allocation of Resources:
One of the central problems in any economy is the allocation of scarce resources to meet unlimited wants and needs. In a centrally planned economy, the planning authority determines the allocation of resources based on the priorities set by the government. They decide how much of each resource should be allocated to different sectors of the economy and industries. This is done through detailed planning and coordination to ensure the efficient use of resources.

Production Decisions:
The planning authority also makes decisions regarding production in a centrally planned economy. They determine what goods and services should be produced, in what quantities, and by whom. The planning authority takes into account the needs and demands of the society, as well as the available resources and technological capabilities. They aim to achieve a balance between different sectors of the economy and ensure the production of essential goods and services.

Distribution of Goods:
In a centrally planned economy, the planning authority is responsible for the distribution of goods and services. They establish a system for the distribution of goods based on the priorities set by the government. This may involve setting prices, quotas, and rationing systems to ensure equitable distribution and access to goods and services.

Conclusion:
In summary, in a centrally planned economy, the planning authority plays a crucial role in solving the central problems related to resource allocation, production decisions, and distribution of goods and services. They use comprehensive economic planning to make decisions based on the overall goals and objectives set by the government. This centralization of decision-making distinguishes centrally planned economies from market economies where the market mechanism determines these outcomes.

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