The three basic economic questions societies face are (1) what goods and services to produce, (2) how to produce those goods and services, and (3) who will get them.
Answers
Answer:
The 3 Central problems of the Economy are :-
1. What to Produce
2.How to Produce
3. For whom to Produce
Explanation:
1. What to Produce
A country cannot produce all goods because it has limited resources.
It has to make a choice between different goods and services.
Every economy has to decide what goods and services should be produced.
Example: If a farmer has a single piece of agricultural land, then he has to make a choice between two goods, i.e., whether to grow rice or wheat.
Similarly, our government has to decide where to allocate funds, for the production of defence goods or consumer goods, and if both, then in what proportion.
2. How to Produce
This problem refers to the choice of technique of production. It arises when there is an availability of more than one way to produce goods and services.
There are mainly two techniques of production. These are:
Labour intensive technique(greater use of labour)
Capital intensive technique(greater use of machines)
Labour intensive technique promotes employment whereas capital intensive technique promotes efficiency and growth.
3. For whom to Produce
The society cannot satisfy all the wants of all the people. Therefore, it has to decide who should get how much of the total output of goods and services.
Society has to make choice of whether luxury goods or normal goods have to be produced. This distribution or proportion directly relates to the purchasing power of the economy.