When collective decision making is utilized to resolve economic questions regarding the allocation of resources, the role of markets will be replaced by political decision making.
What is a collective decision?
When two or more individuals analyze, choose, or use a good or service, collective decision-making is taking place. Members participate in the decision-making process in both families and organizations in a variety of ways.
How do economists solve the problem of scarce resources?
The government decides what to produce and allocates the resources according to its decisions. Another method the governments use to solve the problem of scarcity is by raising prices, but they must make sure that even the poorest consumers can afford to buy it.
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