Question

Case-2

Economic system refers to the mode of production and distribution of goods and services within which economic activity takes place. Three main sets of decisions need to be made by the economic system - what to produce, how to produce, and how to share out the product of the economy. The government’s role in other areas depends on the priorities of the citizens. In some countries, the government creates a central plan that guides the economy. Other mixed economies allow the government to own key industries. These include aerospace, energy production, and even banking. The government may also manage health care, welfare, and retirement programs. Most mixed economies retain characteristics of a traditional economy,but those traditions don't guide how the economy functions. The traditions are so embedded that the people are not even aware of them

Question -2

i) Identify the economic system of Oman. ( 1 marks)

ii) In your opinion, how a mixed economic system is superior to capitalist economy in terms of resources

allocation. Explain.

iii) How the central problems of an economy is addressed and solved in the economic system followed inOman. ( 2 marks)

iv) Compare Oman’s economic system with other economic system you learned in terms of ownership offactors of production? ( 2 marks)

v) Which economic system ensures the welfare of people more? Justify your answer

Answer 1

1. Free market economy in general but mixed economy in particular. Because free market and socialist economies existed only in theories.. But in reality we can see only mixed economic system. Now their govt acts as both employer and purchaser of goods and services.

2. Mixed economic system means the coexistence of both capitalits and socialist economic systems. It is more superior than the free market or capitalist economy because the resource allocation is possible in a more efficient manner. In a mixed economy, both private and public play a vary crucial role. So the resources are allocated on the basis of their further development and production. No one is superior here. There is a public private partnership model existed.

3. The central problems of an economy is what to produce? How to produce and for whom to produce? These problems are solved in a free market economy like Oman by concentrating much more on the private sector. Their Ultimate aim is to maximize profit by supplying their crude oil at a higher price and thereby increasing their standard of living. Labour choice and consumption choice are the another feature of capitalists economy. In order to solve the economic problems of Oman, they need to boost up private sector by investing huge amounts in the big projects and create jobs in their economy especially in the construction fields. Private sector can compensate for the economy.

4. Ownership of factors of production in Oman is managed by private individuals or firms while socialist economies followed collective ownership of factors of production.that means land and labour are owners by the workers. In the mixed economy like India, it is manged and owned by both private individuals and government.

5. Socialist economic system takes the responsibility of the entire population and maximisation of their welfare by giving education, health, social securities etc. The ultimate aim of the socialist economic system is to maximize social welfare.