1. HOW TO PRODUCE?
2.HOW MANY AND HO MUCH TO PRODUCE?
3.WHOM TO PRODUCE?
Answers
Answer:
Central Problems that are faced by every Economy of a Country.Some of the central problems that are faced by every economy of a country are as follows:
1. What to produce?
This problem involves selection of goods and services to be produced and the quantity to be produced of each selected commodity. Every economy has limited resources and thus, cannot produce all the goods. More of one good or service usually means less of others.
For example : production of more sugar is possible only by reducing the production of other goods.
2. How to produce?
This problem refers to selection of technique to be used for production of goods and services. A good can be produced using different techniques of production. By ‘technique’, we mean which particular combination of inputs to be used. Generally, techniques are classified as: Labour intensive techniques (LIT) and Capital intensive techniques (CIT).
For example : textiles can be produced either with a lot of labour and a little capital or with less labour and more capital.
3. whom to produce?
This problem refers to selection of the category of people who will ultimately consume the goods, i.e. whether to produce goods for more poor and less rich or more rich and less poor. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises.
For example : If an economy produces goods for those who can pay high price, then it will end up in producing only those goods and services which a richer section of the society can easily afford, such as expensive jewellery, luxurious cars etc.