Question

1. In Economics we differentiate between peoples’ “wants and needs” and their “resources”. Explain what these terms mean and how they are used in understanding economic decision-making. Provide examples and explain your answer.
2. Explain the difference between a decentralized price system and a centralized command and control system. Provide an example of each from the US economy. Provide examples and explain your answer.

plagiarism free also please attach the citation or refrences

Answer 1

By people wants and needs we mean basically the demand for certain profupro it can be any marketable commodity which has publicly known prices and also people have a positive willingness to pay for it.

The definition of resources on the other hand is somehow difficult resource economics says that the amount of natural resources that can be extracted profitably given the current information and knowledge as well as technology constraints is known as resource stock. However this definition indicates that resources and consumers merchandise are not the same thing. Resources can be physical, natural or human capital also(which is indicated as human resource).

While Decesion making happenes at least from the consumers side. We often don't care about the resources rather we care about the wants and needs. However producers while making a product takes care about the existing resources.

Decentralised system means perfect competition.i.e. basically everyone in the economy is a price taker and also the optimal price is determined by the supply and demand equilibrium.

On the contrary command and control means that there exists a benevolent social planner who has all the information available and he determines the price of a product. But in reality no benevolent social planner exists at all.

After 1929 the great depression, US economy fundamentally relies on decentralised system approach.

But until quite recently as trump government came the us economy is behaving like a command and control economy. As if Trump knows everything and he is determining the unjustified tarrif rates. Which basically prevent trade and globalisation and it reduces the gdp growth rate. Us and China trade war is the reference. And Milton Friedman monetary macroeconomics is another reference.