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Economics Asked by a SnapAndSolve user · about 8 hours ago

HOW DOES THIS ECONOMY BASE ANSWERS TO THE 3 IMPORTANT QUESTIONS?

HOW DOES THIS ECONOMY BASE ANSWERS TO THE 3 IMPORTANT QUESTIONS?

Answer

The three important economic questions are:

  1. What to produce? In a market economy, this is determined by consumer preferences and demand.
  2. How to produce? Businesses decide the most efficient production methods based on cost and technology.
  3. For whom to produce? Goods and services are distributed based on purchasing power and consumer demand.

In a supply and demand-based economy, these questions are answered through market mechanisms where prices are determined by the interaction of supply and demand.

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