Question

Discus the central problems of economics​

Answer 1

Answer:

Central problems of an economy are. What to produce, How to produce, and For whom to produce.

'What to produce' relates to the problem of choice of goods and services to be produced.

'How to produce' relates to the choice of technique of production. It involves a choice between labor-intensive technique and capital - intensive technique.

'For whom to produce' relates to the distribution of goods and services across different sections of society. It focuses on the issue of Economic Equality.

Answer 2

Central Problems of Economy:

• The basic economic activities depend on the production, distribution and disposition of services and goods that can fulfil human requirements.

• However, it is known that human wants and needs have no limit . But, resources that satisfy human wants are scarce.

• This immensity of want and scarcity of resources gives birth to the central problems of an economy.

Allocation of resources:

• A problem that an economy predominantly faces is the allocation of resources. Due to the scarcity of available resources to produce goods and services that can fulfil societal wants maximally.

• This decision needs to be taken depending on the three central problems of the economy.

                        1. What to produce

                       2. How to produce

                       3. For whom to produce

For whom to produce:

    Due to the limited resources, an economy can't fulfil the needs of everyone. Keeping that factors in mind ,it is crucial to decide what goods would be produced for which sections of society.