Question

notes of central problems of an economy

Answer 1

The problem of choice arises on account of the pressure of three interrelated facts, viz, human wants are unlimited, means required to satisfy these wants are limited and means are capable of being put to alternative uses. There would be no problem if the scarce means had only a single use. However, in reality, these scarce means have alternative uses.

Thus, whenever the problems of choice and scarcity arise, economics is said to be emerged, this is why, every economy has to face and solve the following basic problems:

Central Problems of Economy

Answer 2

The problem of scarcity of resources which arises before an individual consumer also arises collectivelybefore an economy. On account of this problem and economy has to choose between the following:

(i) Which goods should be produced and in howmuch quantity?

(ii) What technique should be adopted for production?

(iii) For whom goods should be produced?These three problems are known as the central problems or the basic problems of an economy. This is so because allother economic problems cluster around these problems. These problems arise in all economicswhether it is a socialist economy like that of North Korea or a capitalist economy like that of America or a mixed economy like that of India. Similarly, they arise in developed and under-deve­loped economicsalike.