Question

compared to the socialist economy and the liberal economy

Answer 1

Solution :

1 There is market machanism that connects buyers and sellers in liberal economy on the other hand there is a complete lack of market mechanism in socialist economy .

2 Prince. Of goods and services are settled by the market forces of demand and supply in liberal economy on the other hand prices are largely settled by the central authority appointed by the government .

3 In liberal economy consumers ate sovereign . They buy according to their taste and preference and maximise their satisfaction .The producers maximize their profits by producing goods and services as demanded by consumers .On the other hand in socialist economy consumers sovereignty is ruled out . Central authority decides what goods and services the consumer would need for consumption .

4 The government does not interfere with the free play of market forces of demand and supply . It focuses on the maintenance of law and order . On the other hand in socialist economy government takes on the responsibility of growth and development of the country .

5 In liberI economy people have the right to hold private property . ll means of production are owned privately .On the other hand in socialist economy all means of production are socially owned . No individual can keep the capital in the form of machines , factory etc . An individual can hold as much of private property as is necessary for his subsistence .

6 .In liberl economy the main aim of the producer to produce goods is to earn profit . On the other hand in socialist economy aim of the economy is to promote social welfare not to earn profit .

7 In liberal economy due to freedom of enterprise there are large number of producers of same good and they compete with each other .Buyer compete with each other in order to buy a given product ,so there is full competition . On the other hand in socialist economy state being the chief entrepreneur there is lack of competition . Prices of goods and services are determined by the state .