Economic systems as a type of social system[1] must confront and solve the three fundamental economic problems:[2] Economic systems solve these problems in several ways:"... by custom and instinct; by command and centralized control (in planned economies) and in mixed economies[2] that "...uses both market signals and government directives to allocate goods and resources.
"[3] The latter is variously defined as an economic system blending elements of a market economy with elements of a planned economy, free markets with state interventionism, or private enterprise with public enterprise..."[4] Samuelson wrote in Economics, a "canonical textbook" of mainstream economic thought[5] that "the price mechanism, working through supply and demand in competitive markets, operates to (simultaneously) answer the three fundamental problems in a mixed private enterprise system..."[2] At competitive equilibrium, the value society places on a good is equivalent to the value of the resources given up to produce it (marginal benefit equals marginal cost).
If the cost of removing these inefficiencies of production and distribution is more than the gain, then it is not worthwhile to remove them.َ In view of the scarce resources, the question of whether all available resources are fully utilized is an important one.
In times of depression, many people want to work but can't find employment.
It supposes that the scarce resources are not fully utilized in a capitalistic economy If productive capacity grows, an economy can produce progressively more goods, which raises the standard of living.
The increase in productive capacity of an economy is called economic growth.