The basic economic problems faced by a socialist economy are?

Question: The basic economic problems faced by a socialist economy are?

A socialist economy faces several fundamental economic challenges. One of the primary issues is the coordination problem, where the central planning authority must make decisions about what goods and services to produce, in what quantities, and how to distribute them without the price signals of a free market. This can lead to inefficiencies and shortages. Another problem is the incentive problem; without the motivation of profits, individuals and enterprises may lack the drive to increase productivity or innovate. Additionally, the absence of competition can result in a lack of variety and quality in goods and services. The concentration of power within the state can also lead to issues of corruption and bureaucratic inefficiency. Despite these challenges, socialist economies aim for equitable distribution of resources and wealth, seeking to provide for the needs of all citizens.

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