Question

Make a presentation on the central problems an economy faces.explain these woth reference to the Indian economy.​

Answer 1

Answer:

The central problems of an economy are as following:-

Explanation:

1. What to produce?

2. How to produce?

3. For whom to produce?

Let us discuss these points in detail.:-

1. What to produce?

It is one of the central problems that arise in an economy. It is related to the type of goods and services that need to be produced and the quantity to be produced.  for example consumer goods or capital goods.

Since economy has limited resources, producing more of one good will result in less production of the other.  hence quantity is also a factor.

2. How to produce?

This aspect deals with the process or technique by which the goods and services can be produced. Generally, there are two techniques that can be used for producing, which are:

Labour Intensive Techniques

Capital Intensive Techniques

The choice of technique should be kept in mind.

3. For whom to produce?

This problem deals with determining the people who will be the final consumers of the goods produced. As the resources are scarce in an economy, it becomes difficult to cater to all sections of society.