In a Socialistic Economy allocation of resources is done by
Options
AMarket Price
BConsumer preferences
CA central planning authority
DThe level of corporate profits
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Introduction to Business EconomicsPYQ Jun 22Question 744 of 209
All Questions Correct Answer
✅ Option c — A central planning authority
All Options:
- AMarket Price
- BConsumer preferences
- CA central planning authority
- DThe level of corporate profits
Detailed Solution & Explanation
In a socialistic economy, the allocation of resources is a key aspect of the economic system.
• The core principle of socialism is that the means of production are owned and controlled by the state, rather than by private individuals.
• This means that decisions about how resources are allocated are made by a central authority, rather than by the market or individual businesses.
• The central planning authority determines what goods and services are produced, how they are produced, and who receives them, based on the needs of society as a whole.
The correct answer is based on the definition of socialism, which emphasizes the role of the state in controlling the economy.
• In contrast, options such as market price and consumer preferences are more relevant to a capitalist economy, where resources are allocated based on supply and demand.
• The level of corporate profits is also not relevant in a socialistic economy, as the goal is to meet social needs rather than to maximize profits.
About This Chapter: Introduction to Business Economics
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Meaning, Scope, Price Mechanism
This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.
View Official ICAI SyllabusExam Strategy Tip
Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.
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