(a) The three questions that all economies are faced by are what to produce, how to produce and for whom to produce for given a limited amount of resources. The basic economic problem faced by all economies is scarcity of resources. McConnell, Brue simply defines scarcity as the shortage of resources within an economy.

In a Planned economy the government answers all the three questions what to produce, how to produce and for whom to produce. what to produce is the first question to b addressed. The government conducts surveys and questioners to find what the consumers want before producing them. The decision on whether to start producing capital or consumer goods rests with the government.

The government mass produces because they want to cater for almost everyone and they want the products to be fairly cheap they choose a production method that is least most costly. The last question is for whom to produce. The government desires that everyone gets an equal amount of the products besides social class or any form of discretion.

In a Free market economy the questions what to produce, how to produce and for whom to produce maybe answered by individuals who own the land and capital. The market forces, also referred to as the way that the behavior of buyers and sellers affects the levels of prices and wages, without any influence from the government, determine what to produce. the producers a commodity that the consumers are willing to buy the most. In this economy we can say there is willing seller willing buyer policy. They will produce using the least costly combination of production factors when producing a good. This minimizes their production cost hence large profit margins.

In a Mixed economy the government and the private sector of the economy both have a say in answering the three economic questions what to produce, how to produce and for whom to produce. The firms use the price mechanism, also known as system of interdependence between supply of a good or service and its price, to determine what to produce. These companies use production methods that are less costly because they are profit oriented. What the firms produce is sold to anyone who can afford it or the consumer who can bid the most price.
On the other hand the government in the mixed economy uses feelers and signs in the economy like empty shop shelves, long queues in shops and exorbitant prices of a commodity to produce it. The government produces public goods and consumer goods for private producers have tendencies of not producing them as they are offered freely or at a cheap price. The government may use production methods which benefit the whole society like, labor intensive techniques of production, which provides employment to a large number of people at the same time and at the same time producing a commodity for the whole society. A good example is that of Food For Work Programmes organized in the rural areas of Zimbabwe. Rationing techniques are used to distribute the commodities at a small price or no price at all. The BACOSS programme implemented in Zimbabwe in 2008 is another rationing technique