can anyone give help me out in answering this question(Central problems of an economy)
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The economic problem – sometimes called the basic or central economic problem – asserts that an economy's finite resources are insufficient to satisfy all human wants and needs. It assumes that human wants are unlimited, but the means to satisfy human wants are limited. The economic problem is the problem of rational management of resources or the problem of optimum utilization of resources. It arises because resources are scarce and resources have alternative uses
Three questions arise from this:
• What to produce?
• How to produce? &
• For whom to produce?
What to produce?
'What and how much will you produce?' This question lies with selecting the type of supply and the quantity of the supply, focusing on efficiency.
e.g. "What should I produce more; laptops or tablets?"
How to produce? Capital goods or consumer goods
'How do you produce this?' This question deals with the assets and procedures used while making the product, also focusing on efficiency.
Three questions arise from this:
• What to produce?
• How to produce? &
• For whom to produce?
What to produce?
'What and how much will you produce?' This question lies with selecting the type of supply and the quantity of the supply, focusing on efficiency.
e.g. "What should I produce more; laptops or tablets?"
How to produce? Capital goods or consumer goods
'How do you produce this?' This question deals with the assets and procedures used while making the product, also focusing on efficiency.
gangakalyan8:
for whom to produce?
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