Economic problem is one of the fundamental economic theories in any economy operation. The problem then turns into “how to determine what is to be produced” and “how the production factors are to be allocated”. The economic problem primarily revolves around the idea of choice that ultimately must answer that problem arisen. Hence, different economic models put choice in different hands. A capitalist economy is a form of economic organisation in which means of production viz., land and capital are owned by private people. Capitalistic economy is also known as free market economy which exists without the constraints of government wage and price controls. Proponents of market capitalism argue that resources are automatically allocated toward the things that society collectively values the most. They agreed that role of the government is to protect the property rights of individuals and companies so that they can have the confidence to undertake the economic activity that will create the most value. For example, if a good or service is overvalued, the surplus will force providers of the good or service to lower their prices or to re-allocate their capacity to produce something more worthwhile. Another example is that if the supply of a good or service is inadequate, rising prices increase the value and so cause more production capacity to be directed toward the item. However, In a socialist economy the basic economic problems are solved through plan¬ning. The government appoints a Central-Planning Authority which makes economic decisions. The decision of what to produce and in what quantities is carried out on the basis of national priorities. A socialist economy intends to ensure full utilization of resources. Therefore planning authority keeps this objective in mind while choosing a technique of production. Apart from that, production is controlled by the