Briefly explain the central problems of an economy.
Answers
Answer:
•The three basic economic problems are regarding the allocation of the resources. These are what to produce, how to produce, and for whom to produce.
•Scarcity of resources having alternative uses in relation to demand gives rise to the problem of choice-called central problem. Every economy has to decide how much resources are to be used in production of different goods and services. Thus, allocation of resources is the fundamental problem.
The basic problems central to any economy, therefore, relate to production, consumption and distribution. curve. The economic problem arises in every economy due to
(a) Unlimited wants
(b) Limited resources
(c) Alternative uses of resources. Human beings are required to satisfy their basic needs for their survival.
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