Question

explain the central problem of whom to produce and what are the factors to improve the problem

Answer 1

The problem for whom to produce refers to selection of the category of people who will ultimately consume the goods. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises. The economic problem of "For whom to Produce" basically focuses on the distribution mix of the final goods and services produced. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur.The problem can be categorised under two main heads:

(i) Personal Distribution: It means how national income of an economy is distributed among different groups of people.

(ii) Functional Distribution: It involves deciding the share of different factors of production in the total national product of the country. Guiding Principle of ‘For whom to Produce’: Ensure that urgent wants of each productive factor are fulfilled to the maximum possible extent.