Explain the problem ‘what to produce’ with the help of an example. Does it arise in every economy? Explain.
Answers
Explanation:
Every economy faces the problem of what to produce. Because resources are scarce, we cannot produce everything in whatever quantity we wish to. We are bound to face the problems of what to produce and how much. Illustration: Let us assume that resources are available worth 5 crore. Assuming technology to be constant, we can utilize resources entirely for the production of (say) guns and produce 500 guns, or utilize these resources entirely for the production of (say) bread and produce 500 tons of bread. We need guns for the defence and bread for the masses. Accordingly, both the guns and bread are to be produced. How much of each is to be produced depends on the wisdom of the planners in a planned economy, also upon the market forces of demand and supply in a free economy.
Answer:
The central problem of "what to produce?" which is faced by the economy where the economy decides the goods that needs to be produce in the economy wether consumer or capital goods to satisfy human wants keeping in mind the available resources and state of technology in the economy.
Economic problem arises from scarcity of resource . Every economy faces scarcity of resources because their wants are unlimited and their resources (means) are limited. Therefore, economic problem is the problem of economising scarce resources. It means making the best use of the available resources.