Match the following:
| 1. | What to produce | A. | Profit + Social welfare |
| 2. | How to produce | B. | Luxury goods or necessities |
| 3. | Market economy | C. | Free economy |
| 4. | Mixed economy | D. | Labour intensive + capital intensive |
Answer & explanation
Correct answer: option 4
What to produce - It deals with which type of goods to be produced i.e. whether necessity or luxury goods should be produced.
How to produce - In order to produce goods, what technique should be used i.e. whether labour intensive or capital intensive techniques should be used.
Market economy - It is also known as free economy. All the decisions regarding economic activities is taken by the market forces of demand and supply.
Mixed economy - Mixed economy is the economy where both the motives are being fulfilled i.e. social welfare and profit maximisation.